Question

Bonus Shares can be issued only to equity shareholders.

• A. True
• B. False

Answer 1

The correct option is B False

The Act does not state any provision restricting or prohibiting bonus to preference shareholders. Further it does not expressly states that bonus shares can be issued "only" to equity shareholders.

Hence, bonus shares can be issued to preference shareholders. years.

Bonus Shares are shares given to the existing shareholders in proportion to the number of shares they hold.

They are additional shares given to the current shareholders. It is the further issue of shares by a company to its existing shareholders without any receipt of any consideration.

For Example if investor holds 100 shares of a company and a company declares 2:1 bonus offer, his holding of shares will now be 300 instead of 100.

While Issue of Bonus Shares increases the total number of shares issued and owned, it does not increase the value of the Company, the ratio of number of shares held by each shareholder remains constant.