One ISIN rule
Also written One ISIN per equity · Single ISIN rule
SEBI does not allow a company more than one ISIN for its equity shares unless the amount called and paid differs or the shares carry differential voting rights — all shares under an ISIN must be pari passu.
In plain language
An ISIN is the code that identifies a security in the depository system. If a company's equity could sit under several ISINs, the same share would trade in several places, at several prices, with investors unsure which line their holding was on.
SEBI's rule prevents that. A company gets one ISIN for its equity shares. Every share under that ISIN must be identical in every respect — pari passu — so that one share is interchangeable with any other.
There are only two reasons to break that: the shares are not paid up to the same extent, or they carry differential voting rights. In both cases the shares genuinely are different, so they need a different code.
How it works
The workbook states the rule in Chapter 12.5: a company is not permitted more than one ISIN for its equity shares unless the amount called and paid is not the same or the shares have differential voting rights. In other words, all shares under an ISIN shall be pari passu in all respects.
Where it bites in corporate actions.
- Bonus issues. Allotment of bonus shares is only in dematerialised form, after the issuer has received listing and trading approval from the stock exchanges for all its securities (excluding ESOP options and convertible securities). From 1 October 2024, SEBI shortened the timeline: the issuer applies for approval within 5 working days of the board meeting, fixes the record date (T), the deemed date of allotment is T+1, documents go to the depositories by noon on T+1, and bonus shares are available for trading on T+2. The requirement for a temporary ISIN for bonus shares was removed — they are credited directly into the permanent ISIN.
- Partly paid shares from a rights issue get their own ISIN, because the amount paid is not the same as on the fully paid shares.
- DVR shares get their own ISIN, because their voting rights differ.
Where ISINs come from. At the time of an IPO the company, the R&T agent and the depository sign an agreement for admission of the securities, and the depository assigns an ISIN; the R&T agent liaises with the depositories to obtain it. The DN database records whether shares were dematerialised under a temporary (frozen) ISIN or a permanent (active) ISIN.
A worked example
Illustrative figures. A listed company has 10 crore fully paid equity shares under ISIN INE...01....
A 1:4 bonus. Board meets on a Monday; the issuer applies to the exchanges within 5 working days and fixes the record date as T.
Bonus shares = 10 crore ÷ 4 × 1 = 2.5 crore
T record date — BO download taken
T+1 deemed date of allotment
T+2 2.5 crore bonus shares tradeable, in the SAME ISIN
No temporary ISIN, because the bonus shares are pari passu with the existing ones.
A rights issue of 2 crore shares, Rs 3 paid on application of a Rs 10 face value. These shares are not paid up to the same extent as the 10 crore fully paid shares, so they cannot share the ISIN. They sit under a second ISIN — and an investor holding 1,000 of each sees two lines in his demat statement:
| ISIN | Quantity | Paid per share |
|---|---|---|
| INE...01... | 1,000 | Rs 10 |
| INE...02... (partly paid) | 1,000 | Rs 3 |
The second line exists only because of the unpaid Rs 7. It is the one exception the rule is built to allow.
Why NISM asks about it
Chapter 12.5 (Corporate Actions) states the rule and the October 2024 bonus timeline. Chapter 12's sample question tests it directly: "Every time there is a bonus or rights issue a new ISIN is created by the depository" — false. Chapter 10.1 and 12.1 cover how an ISIN is obtained at IPO; 12.6.1 mentions frozen and active ISINs in the DN database.
Common exam traps
- A bonus or rights issue does not automatically create a new ISIN. A new one is needed only if the new shares differ — partly paid, or with differential voting rights.
- Only two exceptions: amount called and paid not the same, and differential voting rights. Nothing else justifies a second equity ISIN under the rule as stated.
- Temporary ISINs for bonus shares are no longer required from 1 October 2024; bonus shares go straight into the permanent ISIN.
- Bonus shares tradeable on T+2, where T is the record date and T+1 the deemed date of allotment. Do not confuse with the T+3 listing timeline for public issues.
- The depository assigns the ISIN; the R&T agent liaises to obtain it. It is not issued by the stock exchange or by SEBI.
- Pari passu means identical in all respects — votes, amount paid, entitlements.
Where this is taught
Free preparation for NISM Series II-ARelated terms
- Differential Voting RightsEquity shares that carry less than one vote each, letting a company raise capital without diluting control — and letting an investor who does not want the vote buy the same economics at a discount.
- Record dateThe date on which a company looks at its register and decides who gets the bonus, dividend, rights or split — you must be holding the shares in your demat account at the end of that day.
- Corporate actionAn event initiated by a company that changes the securities it has issued — dividend, buyback, bonus, split, consolidation, rights issue or merger — and which the registrar has to execute investor by investor.
- Bonus sharesAdditional shares issued free to existing shareholders in proportion to their holding — no tax at allotment, a nil cost of acquisition, and a fresh holding period from the allotment date.
- ISINThe 12-character code (ISO 6166) that identifies one specific security in the depository system — country prefix, nine-character basic number and a check digit, as in INE475C01012.
- Partly paid-up sharesShares on which the company has not yet collected the full face value; the holder must pay the balance when called, and on default the shares — and the money already paid — can be forfeited.
- Authorised capitalThe maximum amount of share capital a company is allowed to issue, fixed in its Memorandum of Association — a ceiling on what can be created, not money the company has.
- Paid-up capitalThe part of the issued capital that shareholders have actually paid for — issued capital less the calls still outstanding on partly paid shares.