What is bonus share and its benefits. Bonus Share Kya

Last updated on Oct 03, 2022 in Stock Market

Bonus Share Kya Hai  – Hello friends, welcome to another new article. As you know, we keep bringing a lot of articles related to sharing market for you in our blog so that you can have a good understanding of the share market. Taking this episode forward, today we will discuss the bonus share.

 

There are many such terms in the stock market about which a new investor is not properly aware, bonus share is also one of them. In this article, you will get to know what is bonus share, why companies issue bonus shares, what benefits investors get from bonus shares, who can get bonus shares, and how bonus shares are calculated.

 

So let's start today's article without any delay – what is a bonus share?

 

What is Bonus Share

 sequence

1 What is Bonus Share (What Is Bonus Share )

Why do companies give bonus shares?

3 What are the conditions for the issue of bonus shares?

4 Who can get Bonus Shares?

5 How is bonus share awarding calculated?

6 Benefits of Bonus Shares for Shareholders

7 FAQs: Bonus Share Kya Hai 

8 Conclusion – What is Bonus Share 

8.1 Related Articles 

 

Bonus shares are those additional shares that the company gives absolutely free of cost to its shareholders. As its name suggests, such shares are being given as bonuses.

 

When a company announces to give bonus shares, then all those shareholders get bonus shares in whichever investor's demat account is present in that company's demat account till the record date. Which investor will get how much bonus share, it is calculated on the basis of the shares of the company already with the investor.

 

Issuance of bonus shares brings down the share price and increases the liquidity of the company's shares in the market. The process of giving bonus shares is called Capitalization of Profit.

 

Why do companies give bonus shares?

 

Here a question must be coming to your mind why do companies do you harm by distributing shares for free? If you are thinking that companies suffer losses by distributing bonus shares, then it is not so.

 

When a company issues bonus shares, the number of its shares increases but the value of the shares does not increase. The issue of bonus shares reduces the price of the shares. When the share price of a company decreases, investors can easily buy shares of that company.

 

In this way, by issuing bonus shares, the number of investors in the company increases and there is also a demand for its shares in the market. Apart from this, by withdrawing bonus shares, the confidence of the investors in the company increases, due to which the investors remain shareholders of the company for a long time.

 

What are the conditions for the issue of bonus shares?

 

Following are some of the conditions for the issue of bonus shares –

 

  • The issue of bonus shares should be approved in the annual meeting of the company.
  • There should be an agreement between the directors and the shareholders of the company for the issue of bonus shares.
  • The rules given by SEBI should be followed.
  • The stock exchange should be aware of the issuance of bonus shares.
  • If the company has taken a loan, then it is also necessary to take permission from the financial institutions from where the loan has been taken for issuing bonus shares.
  • The company should have sufficient profits.

 

Who can get Bonus Shares?

 

All the shareholders of the company who are the shareholders of the company before the date of record get bonus shares. The cut-off date set by a company is called the record date. This is the date on which the bonus is announced by the company.

 

By this date, it is necessary to have shares of the company in the demat account of the investors. In order to receive the bonus shares, the investors are required to be the owners of the shares of the company till this record date.

 

T+2 rolling system is followed for delivery of shares in India, as if you buy shares today, they will be reflected in your Demat Account within two trading days. In this situation, as the record date of a company is today and if you buy shares today, you will not get bonus shares because the shares will be delivered to your Demat Account in 2 trading days.

 

How is bonus share award calculated?

 

Bonus Shares: Additional shares are available on the shares held by the shareholders. Which shareholder will get how much bonus share, it is decided on the basis of a ratio.

 

For example, suppose you have 100 shares of company X, and company X has announced to offer one bonus share for every 4 shares, ie in a ratio of four (1:4). This means you will get 25 bonus shares. Now the total number of shares you will have in company X will be 125. If this ratio is 2:1, then you will get 200 shares for 100 shares. Then you will have total of 300 shares of the company.

 

So friends, in this way the company calculates which shareholder will get how many shares.

 

Benefits of Bonus Shares for Shareholders

 

The shareholders of the company also get good benefits by issuing bonus shares. Here we have told about some of the benefits of bonus shares to the shareholders –

 

  • Shareholders get additional shares of the company for free.
  • Bonus shares are beneficial for investors who want to remain shareholders of the company for a long time.
  • If the company announces to give Dividend in the future, then you will get more benefit due to bonus share, because Dividend is given on per share basis.
  • Shareholders do not have to pay any tax on bonus shares.

 

FAQs: Bonus Share Kya Hai 

 

What is meant by bonus share?

When the company provides shares to its shareholders for free, it is called a bonus share.

 

What is the record date in bonus shares?

The record date is said to be the date when the company announces the award of bonus shares. As of this date, any investor whose shares of the company are present in the Demat account is eligible for bonus shares.

 

Are bonus shares taxed?

Under the Income Tax Act 1961, there is no tax to be paid on bonus shares in the current financial year, but you are obliged to pay tax on the profit you earn on that bonus share.

 

How much bonus share does a shareholder get?

Shareholders get bonus shares based on the number of shares already held by them. Companies offer bonus shares in a certain proportion.

 

Conclusion – What is Bonus Share 

 

Through this blog post, we have explained to you what is Bonas Share and every important piece of information related to Bonus Share is in very easy words. Bonus share benefits both the company and the investor, if you want to remain a shareholder of a company for a long time, then a bonus share is very beneficial for you.

 

However, when you invest in the stock market, you should not invest only keeping in mind which company is giving bonus shares. Before investing in the stock market, do your research thoroughly.

 

So, friends, that's all in this article, hope you liked this blog post. If you still have any queries regarding Bonus share then feel free to ask us in the comment box. And if you like the information given in the article, then share this information on social media and share it with other people as well.

 

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