What is Bonus?
Jainam Broking Limited
Last Update 2 jaar geleden
An offer of free additional shares to current shareholders is known as a bonus issue, often referred to as a script issue or a capitalization issue. The issuance of bonus shares raises the overall number of shares issued and owned, but it has no impact on the company's market value. (A company may decide to distribute further shares as an alternative to increasing the dividend payout.) Bonus issues are given to shareholders when companies are running short of cash and shareholders expect a regular income.
The bonus shares may be sold by shareholders to satisfy their liquidity needs. The corporate reserves may also be reorganized by the issuance of bonus shares. Cash flow is not a factor in issuing bonus shares. The company's share capital is raised, but its net assets are not.