Avax Apparels and Ornaments Ltd. and R M Drip and Sprinklers Systems Ltd. are set to disburse bonus shares to their shareholders in the week ahead. To be eligible for a bonus issue, investors should pay attention to the record date, which is used to determine eligible shareholders.
The company announces this date in advance, and only those who hold the shares in their demat account as of this record date will be eligible for the bonus allotment. Under India's T+1 settlement cycle, investors must buy the shares at least one trading day before the record date to be eligible. This means that purchases made on the record date itself will not reflect in the demat account in time.
The board of Avax Apparels and Ornaments had recommended an issue of bonus shares in the ratio of 3:1 fully paid-up equity shares. This means that shareholders will receive three new fully paid-up equity shares for every existing share they hold, subject to shareholder approval. The record date for the same is set as April 7.
Similarly, the board of R M Drip and Sprinklers Systems had recommended an issue of bonus shares in the ratio of 5:7. This means that shareholders will receive five new fully paid-up equity shares for every seven existing shares they hold, subject to shareholder approval. The record date for the same is set as April 10.
Bonus shares are additional, free shares issued by a company to existing shareholders based on their current holdings, utilising retained earnings to increase liquidity. While the number of shares increases, the total investment value remains the same, as the share price drops proportionally.
ALSO READ: Q4 Results Next Week: TCS Among A Dozen Companies To Kick Off Earnings Season From April 6
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.