"A company issues bonus shares when it has bright prospects and does not mind diluting capital says Kaushik Dani, headequity, Peerless.
Rights Shares, bonus Shares, meaning, shares available to existing shareholders equal to their holdings which can be bought at a discounted price for a definite period of time.
The base of shareholders can increase in a rights issue if they are not accepted by the existing shareholders and somebody else accepts.Bonus shares increase a company's share capital but not its smash up kartenspiel net assets.They are issued free of cost in specific proportion decided by the company.Advantages and Disadvantages of Issuing Bonus Shares.Rights issue permits the renunciation of rights which have been issued either partially or completely, though no such option is available for bonus shares.When a stock is split, there is no increase or decrease in the company's cash reserves.On the other hand, bonus shares are always fully paid.Thus, depending on the decisions of the senior management and position of the company in the industry, the respective strategy can be pursued.However, issuing bonus shares takes more money from the cash reserve than issuing dividends does.Renounce Rights can be renounced either completely or partially No such option exists Paid Up Value Either fully paid or partly paid Always fully paid.Issuing bonus shares does not involve cash flow.For example, a three-for-two bonus issue entitles each shareholder three shares for every two they hold before the issue.Right Issue vs Bonus Issue Infographics.Shares should never be bought purely on the basis of expected bonus shares."So, the price may come down in the immediate term.But they are the exceptions.
Bonus shares are issued to the shareholders free of cost.
Does a bonus issue benefi ts investors?