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This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 December 2014
merits n demerits if issuing bonus shares
..??
..??
02 December 2014
Advantages of Issuing Bonus Shares:
1) Shareholders get their undistributed profits as bonus shares.
2) Issue of bonus shares keep the stakeholders happy.
3) By issuing bonus shares, the company is able to increase the morale and motivation level of the stakeholders
4) The share capital increases, thus, increasing the security of the creditors.
5) By issuing bonus shares, it increases the marketability of the shares.
Disadvantages of Issuing Bonus Shares:
1) Issue of bonus shares declines the rate of dividend in the future.
2) The companies encourage speculative dealings in shares by issuing bonus shares.
3)Issue of bonus shares is a very lengthy process. It requires the approval of SEBI which might delay in the issue of shares.
4) Declaration of bonus shares is more costly process than declaration of cash dividend.
1) Shareholders get their undistributed profits as bonus shares.
2) Issue of bonus shares keep the stakeholders happy.
3) By issuing bonus shares, the company is able to increase the morale and motivation level of the stakeholders
4) The share capital increases, thus, increasing the security of the creditors.
5) By issuing bonus shares, it increases the marketability of the shares.
Disadvantages of Issuing Bonus Shares:
1) Issue of bonus shares declines the rate of dividend in the future.
2) The companies encourage speculative dealings in shares by issuing bonus shares.
3)Issue of bonus shares is a very lengthy process. It requires the approval of SEBI which might delay in the issue of shares.
4) Declaration of bonus shares is more costly process than declaration of cash dividend.
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