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Right share issue vs bonus share issue?
Right issue-An offer by company to the existing shareholders to acquire some more shares proportionally to the original shares they are holding, usually at relative cheap price while Bonus share issue is giving an offer to the existing shareholders to acquire more shares in proportional to their existing shareholdings without paying. Shukuru stanslaus
What are bonus shares?
Concept: When a company has accumulated large reserves which cannot be disrtibuted as dividents in cash either due to legal restrictions or accounting principle f prudence, it converts this surplus capital & divides the capital among the existing shareholders according to the share capital held by issuing fully paid bonus shares. NOTEWORTHY POINTS: 1. The share of bonus shares soes not constitute a source of income to the company or the financial position of the company remains the same. 2. Issue of bonus shares is not for sistribution of profits among the shareholders and hence not for income tax purpose. 3. Are not a gift. 4. The issue of bonus share does not improve the well being or financial position of the shareholders even though no cash is paid by them to acwire these shares...
Can a company issue free shares?
Yes it is possible and is called a bonus issue, the company must still fund the issue of the shares out of distributable reserves. Check for treatment on a bonus issue to ensure you use the correct treatment!
Difference between right shares and bonus shares?
RIGHT SHARESto increases company's capital they issue right shares. exiting shareholder have prior right to buy this shares so it's called 'right shares'. issue of right shares increases company's capital.BONUS SHARESmany company not distribute dividends each year and this profit is added in reserves after some year company's capital is less than company's size so company capitalized it's reserves by issuing bonus shares. bonus shares decres shares price. this shares is given to the exisiting shareholer in propoastion of holding the shares.
Would it be better for a company to issue shares rather than take out a loan to buy out a company?
A Company shall not issue the shares more than that of it's Authorised capital. It may issue the new shares to the old shareholders of the selling company. A company can purchase another company when it (Purchasing Company) is running in profits only. Then there is no necessity to take bank loans or to issue additional shares for procurement.
Right share issue vs bonus share issue?
Right issue-An offer by company to the existing shareholders to acquire some more shares proportionally to the original shares they are holding, usually at relative cheap price while Bonus share issue is giving an offer to the existing shareholders to acquire more shares in proportional to their existing shareholdings without paying. Shukuru stanslaus
What are bonus shares?
Concept: When a company has accumulated large reserves which cannot be disrtibuted as dividents in cash either due to legal restrictions or accounting principle f prudence, it converts this surplus capital & divides the capital among the existing shareholders according to the share capital held by issuing fully paid bonus shares. NOTEWORTHY POINTS: 1. The share of bonus shares soes not constitute a source of income to the company or the financial position of the company remains the same. 2. Issue of bonus shares is not for sistribution of profits among the shareholders and hence not for income tax purpose. 3. Are not a gift. 4. The issue of bonus share does not improve the well being or financial position of the shareholders even though no cash is paid by them to acwire these shares...
What is issue of shares?
The right shares are the shares which a company issues to its existing shareholders. If e.g., a commercial bank in order to comply with its Central Bank's request of raising paid up capital to a certain amount decides to issue further shares, then these shares will first be offered to its existing shareholders. In case of no response from the existing shareholders, they can then be offered to others.
What are bonues?
Concept: When a company has accumulated large reserves which cannot be disrtibuted as dividents in cash either due to legal restrictions or accounting principle f prudence, it converts this surplus capital & divides the capital among the existing shareholders according to the share capital held by issuing fully paid bonus shares. NOTEWORTHY POINTS: 1. The share of bonus shares soes not constitute a source of income to the company or the financial position of the company remains the same. 2. Issue of bonus shares is not for sistribution of profits among the shareholders and hence not for income tax purpose. 3. Are not a gift. 4. The issue of bonus share does not improve the well being or financial position of the shareholders even though no cash is paid by them to acwire these shares...
What is issue of right shares?
The right shares are the shares which a company issues to its existing shareholders. If e.g., a commercial bank in order to comply with its Central Bank's request of raising paid up capital to a certain amount decides to issue further shares, then these shares will first be offered to its existing shareholders. In case of no response from the existing shareholders, they can then be offered to others.
What is the difference between Bonus Issue and Rights Issue?
Rights Issues are issued to existing shareholders of a company when that company decides to raise more capital via issuing new shares. Existing shareholders are given the "right" to purchase new shares at a discounted price (generally discounted - not always); if they choose not to take this "right" they can instead sell the rights to purchase the shares on a free market to ensure that their net wealth is maintained (as the increase in supply effectively devalues each preexisting share). Bonus issues are generally associated with an investor being issues with extra shares than what they paid for. This can be as means of maintaining net wealth also (redistribution from company held shares to shareholders etc). This is the issue of an actual share that can then be traded on an open market.
What is issue of right?
The right shares are the shares which a company issues to its existing shareholders. If e.g., a commercial bank in order to comply with its Central Bank's request of raising paid up capital to a certain amount decides to issue further shares, then these shares will first be offered to its existing shareholders. In case of no response from the existing shareholders, they can then be offered to others.
Can a company issue free shares?
Yes it is possible and is called a bonus issue, the company must still fund the issue of the shares out of distributable reserves. Check for treatment on a bonus issue to ensure you use the correct treatment!
What is the effect of a bonus issue on the share capital and share premium account?
Bonus shares increases the share capital while reduces the share premium account because amount of share premium is used to issue bonus shares.
For the company who had already have IPO mif they want to issue the new shares are they need to make another IPO?
No. A company can issue an IPO only once. They can issue new shares through bonus shares or through rights issues.
Is it true that Issue of bonus shares affects the total capital structure of the company?
true
Difference between right shares and bonus shares?
RIGHT SHARESto increases company's capital they issue right shares. exiting shareholder have prior right to buy this shares so it's called 'right shares'. issue of right shares increases company's capital.BONUS SHARESmany company not distribute dividends each year and this profit is added in reserves after some year company's capital is less than company's size so company capitalized it's reserves by issuing bonus shares. bonus shares decres shares price. this shares is given to the exisiting shareholer in propoastion of holding the shares.
