24 April 2009
The purpose of Issue of Bonus shares is to distribute the benefits derived by the company in the form of Reserves over a period of time to the shareholders.It also motivates the shareholders to place faith on the company over a longer duration.
24 April 2009
Bonus shares means that profits which otherwise are available for distribution among the members, are not divided among them in cash, but the shareholders are allotted further shares , so company do so to retains the cash in business
04 May 2009
To add one more thing for the purpose of bonus share: It has no present cash flow implication but companies with good dividend track record can reward long term investors in future by keeping dividend payout per% same. Since an investor gets more number of share, a healthy cash profit generating company by keeping dividend %age same as pre bonus reward long term investors.(** In recent times some companies have used this method to provide cash stimuli to parent co' holding large chunk of shares )
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