When companies aim to reward shareholders or obtain extra capital, they often choose corporate tasks such as bonus problems or rights. These affect the number of shares in the market, and shareholders can affect price, share price and ownership patterns. Let's understand their impact on both concepts and shares.

What Is Bonus Issue?

A bonus issue arises when the company offers existing shareholders in relation to its current ownership interests to the existing shareholders. This is often done by using the company's free reserves or intact revenues.

Impact on Equity Shares:

 • The total number of outstanding shares is increasing.

• Share price adjusts downward in the same conditions and keeps the total investment price unchanged.

• No change in ownership.

• The market improves liquidity as more shares become available.

• A company reflects the strong economic position and gives investors' confidence.

What Is a Rights Issue?

A rights and bonus issues occur when a company gives new shares to existing shareholders at a reduced price, usually to raise fresh capital. Shareholders can either do:

• Subscribe to offered stocks,

• Ignore the proposal.

• Sell the rights bonus shares to their rights in the market.

Impact on Equity Shares:

 • After obtaining new capital increases the number of outstanding shares.

• If a shareholder does not subscribe to rights, the ownership dilates the percentage.

• Trade increases capital for expansion, repayment of loans or other purposes.

• Due to an increase in the countdown of the stock, you may affect the short -term (EPS) income in the short term.

Conclusion

Both bonus and the right issues affect shares in different ways. An equity bonus issue enhances shareholder prices at no extra cost, while a right invites shareholder partnership to strengthen the company's financial position. Understanding these effects helps investors make informed decisions about the announcement of such business work.

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