What happens if I hold (Non Pari Passu) NPP shares ?
The ordinary and NPP shares of the company thus carry disproportionate rights as to dividend, although their market price remains the same. To compensate, the buyer to whom these new shares are delivered, for loss of pro rata dividend, the NPP benefit is passed on to the buyer of these NPP shares. Thus if you sell of NPP shares you will have to pay, the dividend declared in respect of ordinary shares and this NPP amount shall be deducted from the sale price. This old-new compensatory value(ONCV) is referred to as ‘new share dividend’. Alternatively if you buy shares and you get delivery of NPP shares, the ONCV will be received by you.
