Reliance Industries Bonus Share Issue Approved by RIL Board:Mukesh Ambani-led Reliance Industries (RIL) has made a big announcement for its investors. The company’s board has approved the issue of bonus shares in the ratio of 1:1. This means that every existing shareholder will get one additional share for free. This bonus issue was announced during the company’s annual general meeting (AGM). What will be the record date for issuing bonus shares will be announced later.
What are bonus shares?
Bonus shares are issued when the company wants to return a part of its profits to investors in the form of free shares. This is beneficial for existing investors as it increases the number of shares they hold. However, the total value of their investment does not increase much immediately as the share price adjusts according to the bonus shares. Still, in the long term, they hope to benefit when the value of the shares is unlocked and the prices return to their previous levels.
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What happens when bonus shares are issued?
The ratio of bonus shares is 1:1. This means that about 35 lakh shareholders of RIL will get one new share free for every share they hold. For example, if you have 1,000 shares of RIL, then after the bonus issue you will have 2,000 shares.The price of RIL shares will decrease after receiving bonus shares. For example, if the current price of one share of Reliance Industries is Rs 2,989 and one additional share is received under bonus, then the new price of one share after the bonus issue may be much lower than the old one, but the number of your shares will double.
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How do investors benefit?
Improved liquidity: Bonus share issue increases the liquidity of the stock as it allows more investors to buy the stock. This can increase the demand for shares in the stock market.
Value expected to be unlocked: After the bonus issue, the new share prices fall, but this fall is expected to be less in proportion to the bonus issue. When this happens, the value of investors’ investment increases. For example, after issuing free shares for one, if the fall in the price of Reliance shares is less than half, then the shareholders will be in profit.
Long Term Benefits: Reliance Industries has been benefiting its investors with bonus share issues and other incentives for a long time. This bonus issue shows the company’s financial strength and its commitment towards benefiting shareholders.
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Important points related to RIL bonus share issue
– Bonus ratio: 1:1 (one free share for every existing share)
– Record Date: To be announced later
– Authorised share capital: To be increased from Rs 15,000 crore to Rs 50,000 crore
– The actual number of bonus shares to be issued will be determined based on the number of fully paid-up equity shares outstanding as on the record date.
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Reliance has issued bonus issues earlier also
Reliance Industries has issued bonus shares 5 times before this. The first bonus issue was issued in 1980 in the ratio of 3:5 and in 1983 in the ratio of 6:10. After this, in 1997, 2009 and 2017, the company has issued bonus shares in the ratio of 1:1.
