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What is bonus share and its record date?

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Bonus shares are free shares issued by the company to its existing share holders. Bonus shares are issued in a ratio of the shares an investor hold. For example when a company offers 1:5 bonus shares, it means a share holder will get 1 free share for 5 shares. So if an investor holds 100 shares at the time of bonus then they will become 120 shares.

Bonus shares are usually announced by the company with a record date, the date which is considered for the bonus shares. All the investors holding the shares on the record date are eligible for bonus shares.

Company usually gives bonus shares as a substitute of dividend payouts.

The face value of the share doesn't get change after bonus. This is unlike stock split.

Bonus shares increases the number of shares in the market which changes the Earning Per Share EPS (companies net profit / number of shares). As net profit is still remain same and the numbers of shares are higher, shares EPS goes down after the bonus shares are issued.

Ideally it should reduce the share price but it doesn’t happen in the ratio of shares are offered as bonus shares thus it usually in the profit of the share holders. This happens because of increase in liquidity of the share and signal of company’s promise to share its profit with its investors.

answered


119 Comments

19. Dharmesh   I Like It. |Report Abuse|  Link|July 4, 2011 7:57:20 PMReply
Dear sir,

i have 500 share of ashok leyland as dated on 1 Jan 2011
i want to know i m eligible to get bonus & when it will get.
18. J R Bangia   I Like It. |Report Abuse|  Link|June 29, 2011 9:17:00 PMReply
When will I get the recent Ttan Bonus shares
17. Suhail   I Like It. |Report Abuse|  Link|June 27, 2011 10:47:43 AMReply
Dear sir,

Record date for bonus share issued by TITAN was June 24, 2011.
I purchased TITAN shares on June 24, 2011, whether I'm eligible for getting the bonus share.

Kindly reply to suhail@easunreyrolle.com

Regards,
Suhail
16. Rajveer Singh   I Like It. |Report Abuse|  Link|June 21, 2011 6:08:06 PMReply
I have 500 Shares of Ashok Leyland dated 5th May'11.
Am i eligible for both dividend and bonus shares??
15. prajith   I Like It. |Report Abuse|  Link|June 17, 2011 2:25:15 PMReply
I have 50 share of ashok leyland which on 15/06/2011 issued bonus share . howfar it will benifit me
14. MARUTHAPPAN   I Like It. |Report Abuse|  Link|May 3, 2011 8:59:57 PMReply
how we know the bonus share is issued to us, the company x share already we have?

13. shivaji   I Like It. |Report Abuse|  Link|April 24, 2011 1:05:06 AMReply

Respected Sir / Madam
Is there any site which keeps track of bonus decelared by various companies (i.e.announcement date)which is updated within couple of hours / days........
2. what is the FACE valUE ?
12. Vimal   I Like It. |Report Abuse|  Link|August 14, 2010 10:57:51 AMReply
Respected Sir / Madam
Is there any site which keeps track of bonus decelared by various companies (i.e.announcement date)which is updated within couple of hours / days........
11. archana   I Like It. |Report Abuse|  Link|March 19, 2010 11:12:47 PMReply
i have puchased 51 share of STRTECH on 12/03/10. the company anniunced bonus share 1:1. the record date was 17/03 and ex date was 15/03. when i will get the bonus share?
10. rk   I Like It. |Report Abuse|  Link|March 18, 2010 12:16:49 PMReply
Will IVRCL share purchased on 17 Mar 10 online be eligible for bonus share with the record date of 19 Mar 10? Is the delay in delivery of online purchase catered for?
9. nitin jhunjhunwala   I Like It. |Report Abuse|  Link|April 6, 2009 6:28:11 PMReply
but as per companies act or sebi guidelines a company can not issue bonus shares within 1 year of its listing of its ipo.Plz explain to me in detail
8. Vikram Singh   I Like It. |Report Abuse|  Link|June 10, 2008 9:04:00 PMReply
Defination by ICICIDirect:

The registered shareholders of the company are entitled to corporate benefits such as dividend, bonus, rights etc. announced by the company from time to time. Since, the ownership of shares of companies traded on the stock exchange is freely transferable and to enable the company to know the persons entitled to the benefits, all transfers of securities have to be registered with the company (this is required in case of transfer of shares in physical form). Since transfer of securities is a continuous process open any time, the company announces cut off dates from time to time and members on the register of shareholders as of these cut off dates are entitled to the benefits. Such cut-off dates are record dates. Alternatively, the company might choose the close the register of shareholders for registration of transfer during a specified period. All transfer requests received before the commencement of the book closure or on or before the record date are considered for the purpose of transfer. A Company cannot close its books for more than 30 days at stretch for a book closure, and not more 45 days in a year. The period between two Book Closure cannot be less than 90 days.

ACC announced a Book Closure (BC) for the period 6th July to 30th July'96. During this period, the company had closed its register of security holders. This was done to determine the number of registered members who were eligible for the Bonus 3:5 and a dividend of 40%. The process of transfer of shares was operational till 5th July'96. The company announced a No Delivery period from 12th June to 9th July'96 before the Book Closure. During this period, trading was permitted in the securities but the trades were settled only after 9th July. Hence, the buyers of the shares were not be eligible for the Bonus 3:5 and a 40% dividend. The first day of the No Delivery period is considered as an Ex - Date since the buyer of the shares is not eligible for the corporate benefits for this BC.

The same logic holds good for Record date, but the two main differences are that:

In case of a record date, the company does not close its register of security holders. Record date is a cut off date (in the above example '5th july96) for determining the number of registered members who are eligible for the corporate benefits [Interim dividend (30%)].
7. sami yousif   I Like It. |Report Abuse|  Link|May 27, 2008 1:44:51 PMReply
Company usually gives bonus shares as a substitute of dividend payouts.
Is there any other scientific reasons for the companies to issue bonous shares? what does the company benefit from capitalizing part of its resrve,SHE is still the same?
6. SAMIR   I Like It. |Report Abuse|  Link|February 27, 2008 9:31:15 PMReply
CAN ANYONE PLSE TELLL ME WHAT IS RECORD DATE FOR BONUS SHARES AND WHEN IT WILL BE GIVEN TO SHAREHOLDER
5. vipingupta   I Like It. |Report Abuse|  Link|February 23, 2008 6:57:58 PMReply
repl will issue bonus 1for1 as no money would not be paid by the co. for fractiion share but the may be lesser face value or afree warrant to be converet on later date.
4. shyam sunder guptas   I Like It. |Report Abuse|  Link|February 22, 2008 7:12:41 PMReply
thanks for posting my comments on website. In this connection I want to add one thing about record date that bonuses will be issued only to existing holders rather than original allottee as in company law there is no provision for issuing shares retrospectively
3. pawanluthra   I Like It. |Report Abuse|  Link|February 21, 2008 9:59:02 AMReply
i think bonous shares 1;1 cheers and enjoy i am sure investor wil not loss this shares long term
2. PM   I Like It. |Report Abuse|  Link|February 19, 2008 7:58:22 PMReply
ISSUE OF BONUS SHARES DOESENT HAVE ANY SENCE BECAUSE THE RATEIS STILL TO HIGH INSPITE OF DOING THIS THEY HAVE TO SPLIT THE SHARE IN 5:1 RATIO
1. Gaurav    I Like It. |Report Abuse|  Link|February 18, 2008 1:07:30 PMReply
even if they issue bonus shares. price would automatically get adjusted and there would hardly be any chances of gain.