Before discussing companies giving bonus shares in February 2023, let’s get the basics out of our way.
What are bonus shares?
To answer your question, ‘what is bonus shares?’: these are free shares given to shareholders as a reward and encouragement to stay invested in the company.
When companies announce bonus shares it is usually because of two reasons – either the company is low on cash flow and doesn’t have enough funds to pay dividends or they want to repurpose their profit.
Another name for bonus shares is ‘capitalisation of profit’ because it is either given from profit or reserves.
Bonus shares are free shares awarded to existing shareholders on the basis of their existing holding. However, bonus shares are not the same as stock splits.
Stock splitting divides a single share into two or more following a fixed ratio. Also, the face value of the stock changes when it is split. But bonus shares are additional shares given to current shareholders. In case of bonus issues, the face value of the stock remains unchanged.
You can read the article on upcoming stock splits in February 2023 to know more.
Now returning to the topic of bonus shares, it is usually good news for investors who are tired of paying high dividend taxes. It increases the shareholders’ investment in the company and also increases liquidity. The fundamental behind the bonus share issue is that the company’s share price reduces by the same proportion of the number of new shares issued.
How bonus shares benefit investors
Below are some of the primary benefits of getting bonus shares.
- Investors have to shell out 30% on the higher side as a tax on dividends. Bonus shares are far more beneficial since investors don’t have to pay taxes on them. However, selling bonus shares will attract capital gain taxes at the rate of 15% for short-term gains and 10% for long-term gains if the amount exceeds ₹1 lakh.
- Long-term investors get benefits like higher dividends and capital appreciation. So, your earnings from dividend payments may increase.
- Bonus shares increase both accessibility and affordability of the stock. Issuing bonus shares increases the total number of outstanding shares in the market and enhances liquidity. Moreover, additional shares will reduce the share price and make the shares more affordable to investors.
Understanding bonus share meaning will help you decide whether you want to add these companies to your portfolio or not.
Companies giving bonus shares
There is only one company giving bonus shares in February 2023. Here are the details.
|Company Name||Bonus ratio||Record date||Ex-bonus|
|M K Proteins||2:1||February 3, 2023||February 3, 2023|
M K Proteins
The company has announced bonus shares in a 2:1 ratio. The shares will trade ex-bonus from February 3, 2023.
The 2:1 ratio means that shareholders will receive 2 bonus shares for each of the shares they own.
M K Proteins shares are listed in BSE and NSE. You can track M K Proteins’ share price on Angel One’s mobile app before buying.
How can you participate in bonus shares?
Here are a few things you should know to participate in bonus shares.
Ex-date: The ex-date is usually two days before the record date since the settlement cycle followed in the Indian stock market is T+2. If you buy the shares on the ex-date, those shares will get credited to your account before the record date.
Record date: It is the cut-off date to consider the eligibility of the shareholders for bonus shares. You must get delivery of the shares before the record date.
Hope you have found the article on bonus shares 2023 helpful.
It usually takes fifteen days from the record date for the bonus shares to get credited to investors’ accounts. Since the entire process is managed digitally, investors will get the shares credited to their accounts directly. If you want to participate in bonus issues, it is mandatory to have a Demat account to buy shares in the market.