- Following are the impacts of a bonus issue on Equity Holdings and F&O Positions: -
- Increase in share quantity: Existing shareholders receive additional shares due to the bonus issue.
- Dilution of individual share value: The increased number of shares due to the bonus issue can dilute the individual value of per share , keeping the overall value of the investment same.
- Redistribution of ownership: The bonus issue redistributes the company's ownership among shareholders.
- Enhanced liquidity: Company may pay dividend by issuing bonus share instead of paying dividend in cash. It maintains liquidity position of the company.
- Potential impact on stock price: The announcement of a bonus issue can generate positive sentiment among investors. By issuing bonus shares, companies can attract more investors and increase trading activity in the stock.
- Impact on dividend payments: Increased shareholdings may lower dividends per share, but the company's overall dividend distribution remained unchanged.
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