At times, some companies do reduction in their share capital. Company announces some ratio to make this effect. This affects the amount invested in investors' accounts.
In capital reduction, the amount invested will be reduced as per this ratio. However, the quantity of stocks will remain same.
1. For example if we take Infosys transaction as below :
- You can see here in PMS, total investment in Infosys is 15,000.
2. For capital reduction, we will pass Demerger entry with the same company and quantity but reduced amount invested as per the ratio.
Go to Other Transactions > Add Demerger
3. Let us say the original amount is 15,000 and it has to be reduced 10,000 as per ratio.
Enter the new amount and click on Save.
4. When you click on Save You will get this Pop-up window, you need to click on Ignore.
5. You can see PMS effect as below.