Question

Advantage of issue of bonus shares in the view of investors or shareholders

Answer 1

Advantage of issue bonus shares are---

1)) Increase goodwill - - Goodwill is the reputation of the business. Without goodwill business can't survive in any place. So every business needs to increase their goodwill in many ways. One way is the issue of bonus shares which also increases the goodwill or reputation of the business in the market for long survival.

2)) Reduces rate of dividend - - By issuing bonus shares, a company also take a benefit of reducing the high rate of dividend.

3)) Retain cash in business - - Availability of cash in the business is must,so that unknown liabilities can reduces time to time. Business can retain cash in the business by issue bonus shares.

4)) Capital structure benefits - - Capital structure of the business also becomes realistic by issuing bonus shares..

5))More security to creditors - - Issue of bonus shares provide more security to creditors. So in this way business also benefit with issue of bonus shares

. HOPE YOU LIKE IT

Answer 2

Explanation:

There is no need for investors to pay any tax on receiving bonus shares.

1. It is beneficial for the long-term shareholders of the company who want to increase their investment.

• Bonus shares enhance the faith of the investors in the operations of the company because the cash is used by the company for business growth.