What will happen if I hold fewer shares than required by the merger ratio?

If the number of shares you hold is below the merger ratio, then the Registrar & Transfer Agent (RTA) will distribute sales proceeds to eligible shareholders in proportion to their fractional entitlement. The amount will be credited to the bank account registered with their demat account.

For example, as per the amalgamation scheme of Tata Steel Ltd and Tata Steel BSL Ltd: 

For each equity share of Rs. 10 (each credited as fully paid-up by Tata Steel Ltd.), fifteen equity shares of Rs. 2 (each fully paid-up) can be held by an equity shareholder in TS BSL.

Therefore, for every 15 shares of Tata Steel BSL Ltd., eligible investors will receive 1 share of Tata Steel Ltd. 

Scenario 1: Mr Shyam holds 10 shares of Tata Steel BSL Ltd. Since he holds less than 15 shares, the eligible amount is credited it his registered bank account.

Scenario 2: Mr Shyam holds 40 shares of Tata Steel BSL Ltd. Since the merger ratio is set as multiples of 15, he will receive 2 shares of Tata Steel Ltd., and the remaining 10 shares will be treated in a fractional manner (and funds credited to his registered bank account).

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