Oil India Likely To Consider Bonus Issue On May 20

A bonus issue involves providing existing shareholders with free additional shares.

<div class="paragraphs"><p>Image used for representational purpose (Source: Oil India/X)</p></div>
Image used for representational purpose (Source: Oil India/X)

Oil India Ltd.'s board of directors may consider a proposal for issue of bonus shares in a meeting that is scheduled to be held on May 20, it said on Wednesday. At the board meeting, the public sector undertaking is also set to approve the financial results for the quarter and year ended March 31, 2024, according to an exchange filing.

If approved, this will mark the first time since 2018 that the oil exploration and production company has had a bonus issue.

What's Bonus Issue?

A bonus issue, also called a scrip or capitalisation issue, involves providing existing shareholders with free additional shares. For example, if a company announces a 1:2 bonus issue, the shareholders are entitled to receive two additional shares for each existing share they hold.

Such actions are taken by companies to stimulate further investment and reward shareholders. A bonus issue increases a company's outstanding shares but not its market capitalisation. Companies usually fund a bonus issue through profit or existing share reserves. The issuance of bonus shares is not taxable. However, shareholders must pay capital gains tax if they sell them for a net gain.

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The last bonus that Oil India had announced was back in 2018. The issue was in the ratio of 1:2, with shares quoting ex-bonus from March 27, 2018.

Shares of Oil India were trading 1.7% higher at Rs 630.15 apiece on the NSE, compared to the 0.06% decline in the benchmark Nifty at 12:20 p.m.

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