Bonus share
Encyclopedia
A bonus share is a free share of stock
given to current shareholders in a company, based upon the number of shares that the shareholder already owns. While the issue of bonus shares increases the total number of shares issued and owned, it does not increase the value of the company. Although the total number of issued shares
increases, the ratio of number of shares held by each shareholder remains constant.
which is a date on which the company will ideally temporarily close its books for fresh transfers of stock. Read "Book Closure"
for a better understanding.
An issue of bonus shares is referred to as a bonus issue.
Depending upon the constitutional documents
of the company, only certain classes of shares may be entitled to bonus issues, or may be entitled to bonus issues in preference to other classes.
Bonus share is free share in fixed ratio to the shareholders.
for example Reliance Industries Limited issue bonus share in 1:1 ratio and Rs.13.00 as dividend/share
Sometimes a company will change the number of shares in issue by capitalising its reserve.In other words,it can convert the right of the shareholders because each individual will hold the same proportion of the outstanding shares as before. Main reason for issuance is the price of the existing share has become unwieldy.
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
given to current shareholders in a company, based upon the number of shares that the shareholder already owns. While the issue of bonus shares increases the total number of shares issued and owned, it does not increase the value of the company. Although the total number of issued shares
Issued share capital
The issued share capital of a company is the total nominal value of the shares of a company which have been issued to shareholders and which remain outstanding . These shares, along with the share premium account, represent the capital invested by the shareholders in the company...
increases, the ratio of number of shares held by each shareholder remains constant.
Explanation
Whenever a company announces a bonus issue, it also announces a "Book Closure Date"Book closure
When shares of a joint stock company invariably change hands during market trades, identifying the owner of some shares becomes difficult. So it is difficult to pass on certain benefits to shareholders....
which is a date on which the company will ideally temporarily close its books for fresh transfers of stock. Read "Book Closure"
Book closure
When shares of a joint stock company invariably change hands during market trades, identifying the owner of some shares becomes difficult. So it is difficult to pass on certain benefits to shareholders....
for a better understanding.
An issue of bonus shares is referred to as a bonus issue.
Depending upon the constitutional documents
Constitutional documents
In relation to artificial persons, the constitutional documents of the entity are the documents which define the existence of the entity and regulate the structure and control of the entity and its members...
of the company, only certain classes of shares may be entitled to bonus issues, or may be entitled to bonus issues in preference to other classes.
Bonus share is free share in fixed ratio to the shareholders.
for example Reliance Industries Limited issue bonus share in 1:1 ratio and Rs.13.00 as dividend/share
Sometimes a company will change the number of shares in issue by capitalising its reserve.In other words,it can convert the right of the shareholders because each individual will hold the same proportion of the outstanding shares as before. Main reason for issuance is the price of the existing share has become unwieldy.