What Are Bonus Shares And Its Relevance?

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Many people are into the share market, but bonus shares happen to be amongst those issues that they do not have a grasp of. Well, when there are additional shares that are to be issued towards the existing shareholders without the need for any receipt of payment from them, then that is basically the process of issuing the bonus shares of a company.

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What Are Bonus Shares And Its Relevance?:

What Are Bonus Shares And Its Relevance ?

Slide 2:

Many people are into the share market, but bonus shares happen to be amongst those issues that they do not have a grasp of. Well, when there are additional shares that are to be issued towards the existing shareholders without the need for any receipt of payment from them, then that is basically the process of issuing the bonus shares of a company. Why are bonus shares put to the market? Well, these are basically issued to the existing shareholders and mainly come out of the prophets and the results of the company. The bonus shares are almost always paid fully in advance.

Slide 3:

Process of sharing the bonus shares: - 1 . The company needs to check if the articles in the company do permit for the issue of the bonus shares. Otherwise, they could either forgo providing the bonus shares, or amend the articles to make it permissible. 2 . They need to check whether the bonus shares which are to be issued happen to be within the limits of the share capital from the company. If this is in tune with the share capital, then all is well. If not, then the articles in the memorandum of the company will need to be amended suitably.

Slide 4:

A board meeting will then be convened, and a proposal of the bonus issue will have to be fixed up with the members. After the issue is taken care of by the board members, then an emergency general meeting will need to be convened, so that the approval of the shareholders can be secured through the meeting itself. Dates in regards to the closing of the register of members as well as the transfer of the books will need to be approved in the meeting itself. To get a  format of board resolution , be sure to check out this site. 

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