18-Jul-2023
2 mins read
Reliance Industries has announced the demerger of its financial arm, ‘Jio Financial Services’. As a result, the National Stock Exchange of India will hold a special pre-open session for Reliance Industries (RIL) stock due to the separation of the company’s financial services business on July 20. However, if the price equilibrium does not discover, all orders will be cancelled the stock will continue to trade in the call auction mechanism.
Allotment Procedure
RIL has designated July 20 as the record date to identify eligible shareholders for the distribution of shares in the demerged entity. As part of the demerger process, RIL shareholders will receive 1 share of Reliance Strategic Investments, the demerged entity, for each share they own in the conglomerate. As per the exchange methodology, the spun-off business, Jio Financial, in this case, will be included in the indices at a consistent or fixed price.
The new entity will be named Jio financial services, and it will be temporarily included in the Nifty 50 and a few other indices until it is officially listed on the stock exchanges. This special inclusion will take place for a brief period.
Apart from Nifty 50, Jio Financial will be temporarily added to 18 other indices of NSE, including Nifty 100, Nifty 200, Nifty 500, Nifty Energy, and Nifty Oil & Gas.
Demerge Procedure
According to the new regulations, when a company undergoes demerger or spin-off, the resulting entity will be included in the index at a fixed price. This fixed price is determined as the difference between the demerged company’s closing price on the day before the ex-demerger date (T-1 day) and the price established during the special pre-open session.
On the T-1 day, after the market closes, the exchange will generate a dummy symbol to be added to the corresponding index. On the ex-demerger date (T day), a special pre-open session will take place to determine the fixed price for the inclusion of the spun-off entity in the index.
Leadership Announcement
Isha Ambani has been appointed non-executive director on the Jio financial services board, with Veteran banker KV Kamath as a non-executive chairman and former ICICI Bank executive Hitesh Sethia as the managing director and Chief executive officer.