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Reliance Industries: 1:1 bonus share – How will shareholders benefit? EXPLAINED

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RIL bonus shares: Reliance Industries Limited (RIL) board will be meeting on September 5, 2024, to consider and approve RIL bonus shares in the ratio 1:1. RIL chairman Mukesh Ambani, in his speech at the 47th AGM of RIL, announced the issuing of bonus shares to RIL shareholders.

“I would like to share some good news with you today. At 1.45 pm today, Reliance Industries Limited has sent a notice to the stock exchanges that the Board of Directors will meet on 5th September to consider issuing Bonus shares in the ratio of 1:1,” Ambani said in his speech

“When Reliance grows, we reward our shareholders handsomely. And when our shareholders are rewarded handsomely, Reliance grows faster and creates more value. This virtuous cycle has been the guarantor of your company’s perpetual progress,” he further added.

RIL bonus shares: What are bonus shares?

Bonus shares are additional shares that a company issues to its existing shareholders at no extra cost. These are, in simple words, fully paid-up shares that are awarded to a company’s shareholders.

Why do companies give bonus shares?

Bonus shares make investment in a company more attractive for retail investors. They reduce the price of shares by increasing liquidity. They are also considered a good option over providing dividends to the shareholders. Bonus shares reflect the sound financial position of a company.

How will RIL bonus shares benefit investors?

While RIL bonus shares will increase the number of shares with every investor, they will not increase the value of the shares as the price of the share is adjusted with the increase in liquidity. RIL has previously rewarded shareholders with bonus shares in 1980, 1983, 1997, 2009, and 2017. Issuing bonus shares reflects the sound financial position of the company. Bonus shareholders do not have to pay taxes when they receive bonus shares. In the long run, investors are rewarded when shares appreciate in value over the years.

Source: msn

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