BONUS ISSUE OF SHARES

Bonus shares are issued by the Company to its existing shareholders, without charging anything from them. As the name suggests, such shares are issued as ‘bonus’ to the shareholders, free of cost. 

They are always fully paid-up shares i.e., no payments are required to be made for the bonus shares by the shareholders, ever. The bonus shares are issued in proportion to the shares held by the shareholders in the Company. For e.g. the company may decide to issue 1 bonus share for every 10 shares held by the shareholders in the company. The number of shares with the shareholder increases but investment of the shareholder remains the same.

Bonus shares are usually issued when the Company wants to retain its shareholders, but is not in a position to pay dividends. This usually happens when the company has earned profit but

The Company issues bonus shares to the shareholders out of the free reserves of the company. Free reserves are that part of the profits earned by the Company, which is not utilized by the company for any other purpose. It is another way of attracting the shareholders to invest in the Company. A company may decide to issue bonus shares to the shareholders as an alternative to paying out dividend to them.

Finding out Companies that give bonus shares is always beneficial for an investor to decide when and how they want to invest. If you are wondering how you will find such companies, then Stakeindia is the answer for you!

Stakeindia is the best Share Market teaching classes in Nashik, where education is imparted to all the students/members.

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