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Plz explain

Dev (Article Trainee.) (613 Points)

21 August 2012

Frndz, Plz explain, the difference between bonus share and bonus issues.. Thanks in advance..

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Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 22 August 2012

Bonus Share in short means extra shares alloted by the co to the shareholders in addition to their exisitng shareholding without any cost to be borne by the shareholders. Bonus issue means alloting the extra shares to the shareholders by the co.

When the company has huge reserves & surplus then in such case the co does not make payment of dividend to teh shareholders but it capitalizes some part of the Reserves & Surplus by alloting Bonus shares to the shareholders. This part of the reserves & surplus capitalized is added to teh Issued Share Capital of the company.