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New Delhi: Reliance Industries Limited (RIL), India’s largest company by market value, made news during its 47th annual general meeting (AGM) on August 29. Chairman and Managing Director Mukesh Ambani announced that the company’s Board of Directors will meet on September 5 to consider issuing bonus shares, possibly at a 1:1 ratio.
“Reliance Industries Limited has informed the stock exchanges that the Board of Directors will meet on September 5 to discuss issuing bonus shares at a 1:1 ratio,” Ambani stated. He added, “Our mission is to create wealth for India and improve the quality of life for every Indian, every day.”
Before going ahead, first, break down what exactly is a bonus issue. A bonus issue, also known as a bonus share issue, occurs when a company distributes additional shares to its existing shareholders. This is done using the company’s accumulated reserves or profits.
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Companies typically issue bonus shares to make their stock more affordable for retail investors, especially when the share price has risen significantly. By increasing the total number of shares, the price per share is reduced, making it more attractive to smaller investors. Bonus shares also reward loyal shareholders and demonstrate the company’s confidence in its future profitability.
For RIL shareholders, this latest bonus issue means their number of shares will double without any extra cost. This move will benefit investors by increasing their holdings at no additional charge. For instance, if a RIL shareholder owns 100 shares, they will receive 100 additional shares through this bonus issue.
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Mukesh Ambani's Reliance Industries to Consider 1:1 Bonus Share Issue on September 5