When a company makes a profit sometimes they distribute its profit to shareholders which are called Dividend. and when companies try other ways to reward their shareholders that time companies distribute their profit instead of dividend. Companies distribute their profit in form of Bonus Shares. But we should know what exactly the bonus issue is and when it will be credited to my Demat account.
What Are Bonus Shares?
When companies get the profit that time company issue additional shares to the shareholders
Recently Larsen and Toubro Ltd announced their bonus share issue let’s see the Bonus share history of Larsen and Toubro shares. Bonus shares are free to the shareholders that’s why we call them to bonus shares. The company can issue bonus shares from his profit or reserves. Companies issue bonus shares in a fixed ratio such as 1:2, 1:3, 2:3, etc.
Let’s learn with an example:
If you hold 1000 shares of Larsen and Toubro company limited. The company has announced a bonus shares issue of 2:1.
Now, your total holding will be 3000 shares, 1000 original shares + 2000 bonus issue= 3000 shares.
Who Are Eligible to Receive Larsen and Toubro Bonus Shares?
We all know that the company issue bonus shares to its existing shareholders but for all shares which are listed in the stock market, those shares are bought and sold daily in the stock market. That’s why existing shareholders change from time to time. So how companies will decide who will get the bonus share?
To avoid such type of confusion companies announced a record date which is also called cut of date. Those shareholders holding Larsen and Toubro share on the record date are eligible for Bonus Shares.
If someone buys shares on the record date will you be eligible for a bonus share?
No, because in India T+2 cycle is existing for share settlement. That’s why you have to purchase shares before the record date.
When Will Larsen and Toubro Bonus Shares be Credited to the Demat Account?
On every record date companies management review their shareholder list of who holds shares on the record date in his Demat account.
Then, the company allows an international securities identification number(ISIN) for all bonus shares. The company will credit the bonus shares after completing the all necessary procedure.
Generally, it might take 15 days from the record date to credit your bonus share in your Demat account.
After receiving the bonus shares in your account you will get a text message from CDSL (Central depository service limited).
If your bonus shares are not credited even after 15 days then you have to make a call to your customer care executive and get clarification.
Let’s see the previous bonus share issue History of Larsen and Toubro shares.
Record Date.    Ex-Date Ratio            Ratio
14 July 2017.    13 July 2017.          1:2
13 July 2013.    11 July 2013.          1:2
3 Oct 2008.     1st Oct 2008.         1:1
29 Sep 2006.    28 Sept 2006.         1:1
Benefits of Larsen and Toubro Bonus Shares to Shareholders.
- Larsen and Toubro shares are so highly prised nowadays but when the company announced bonus shares that time shareholders get free bonus shares without bearing the additional cost.
- As the company grows bonus shares price will also grow and you can sell them in the market and gain a fancy return on your investment.
FAQ
What is Bonus share?
A bonus share is a type of share that a company issues from its profit to shareholders.
Who decides the Ratio of bonus shares?
The company’s management decides the bonus shares ratio.
Does bonus share free of cost?
Yes, a bonus share is free of cost company issue it as a reward to its shareholders.
If I buy shares after the record date then, will I get a bonus share?
No, you have to buy company shares before the record date.
Hi, I’m Damini majumder. I’m the author and writer of this blog and share all the information related to Cryptocurrency, Finance, Market forecast, Stock forecast, US and Indian shares through this website. I’m an experienced content writer and aspire to succeed as a content writer in the virtual realm by generating traffic through my immersive content and engaging taglines. Read More