What is Bonus Share | Bonus Share क्या है और क्यूँ issue होता है? | Angel Broking
#BonusShare #WhatisBonusShare
A bonus issue is an offer of free additional shares to existing shareholders. A company decides to distribute further shares as an alternative to increase the dividend payout to its shareholders.
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What is Bonus Share?
There are certain situations when a company is unable to pay the dividend in cash, because of a possible shortage of liquid funds, despite having a profitable turnover. In such cases, the company issues bonus shares to the current shareholders instead of paying the dividend in cash. Bonus shares are issued as new or additional shares, free of cost and in proportion to the shares and dividends held by the shareholder.
When the company issues bonus shares, since the profits or reserves of the company are converted into share capital, there is a ‘capitalization’ of the profits. The company cannot charge the shareholders for the issue of the bonus shares. A sum that is equal to the value of the bonus issue, is adjusted against the profits or the reserve, and then transferred to the Equity Share Capital Account.
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