previous regarding the issue of bonus share should be in___
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companies
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Introduction of Bonus Shares
Bonus issue means offer of free additional shares to the existing shareholders. A company may decide to distribute further shares as an alternative to increase dividend payout.
Bonus shares may be issued by company to restructure the company’s reserves. Issue of bonus shares will increase the company’s cash flow but the net asset of the company will remain same.
Example: Company issues Bonus shares in the ratio of 4:1 (1Bonus share for every 4 shares held by them)
If Mr. X existing shareholder holds 400 shares of the company, he will get 100 bonus shares, now his holding will be 500 shares in the company. At the time of issuing dividend, he will get dividend on 500 shares not on 400 shares
[400*1/4 = 100 Bonus shares
Holding after Bonus Issue will be : 400 Shares + 100 Shares]
Whether there is issue of dividend or issue of bonus shares purpose will be providing income to the shareholders. While at the time of dividend issue, shareholders may get money in cash and at the time of issuing bonus shares, shareholder will get benefit through shares they can sell their shares and get liquidity on the same.
Plz make me brainlist
Bonus issue means offer of free additional shares to the existing shareholders. A company may decide to distribute further shares as an alternative to increase dividend payout.
Bonus shares may be issued by company to restructure the company’s reserves. Issue of bonus shares will increase the company’s cash flow but the net asset of the company will remain same.
Example: Company issues Bonus shares in the ratio of 4:1 (1Bonus share for every 4 shares held by them)
If Mr. X existing shareholder holds 400 shares of the company, he will get 100 bonus shares, now his holding will be 500 shares in the company. At the time of issuing dividend, he will get dividend on 500 shares not on 400 shares
[400*1/4 = 100 Bonus shares
Holding after Bonus Issue will be : 400 Shares + 100 Shares]
Whether there is issue of dividend or issue of bonus shares purpose will be providing income to the shareholders. While at the time of dividend issue, shareholders may get money in cash and at the time of issuing bonus shares, shareholder will get benefit through shares they can sell their shares and get liquidity on the same.
Plz make me brainlist
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