Bonus Share

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Nilesh Makwana

Nilesh Makwana (Querist)
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24 April 2009 If a company issues bonus shares than there is no any fundflow then why company declare bonus shares?

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)
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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.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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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

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CMA KNVV Sri Vidya - Sri Kanth

CMA KNVV Sri Vidya - Sri Kanth (Expert)
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24 April 2009 agree with experts

Ankur Garg

Ankur Garg (Expert)
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04 May 2009 Right justification by the Experts...

CA. Pradeep Jhawar

CA. Pradeep Jhawar (Expert)
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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 )