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Diff b/t rights issue and bonus issue

Swapnil (Student) (183 Points)

08 March 2014

Sir Plz state what is the dirrerence between Bonus Issue and Rights Issue?

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CA Mansi Kotecha (Keep Smiling !!) (6890 Points)
Replied 08 March 2014

Bonus Issue : Bonus is issued to the existing share holder on the basis of their holding. It is extra share for free and directly given to all the share holder of the Co. Eg. Bonus issued 1:1 means if a share holder has 1 share than 1 more share is awareded free on the basis of their holding

Right Issue : Issued to share holder when a co. decides to raise capital via issuing new shares. Through this issue share holders are given "Right" to purchase shares at a discounted prices. Its an previlage given as they are share holders of the co. This Right can also be sold to other person in exchange of some monetary benefits if share holder doesnt want to exercise the Right. Eg. Right to purchase share for Rs. 100 when price at recognized stock exchange is Rs. 500 means as you being share holder you are given right to purchase at low cost.

Hope you understood !!