Benefits of a stock bonus issue

[Akash_Shah]

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Infibeam Bonus share

Well for an average investor, bonus and split will look one and the same, as number of shares increases, while keeping overall value same, but from accounting perspective there is a difference. For bonus issue, company uses it free reserves to transfer to equity. So in effect new equity capital is generated and distributed to shareholders by company. Why this are called as free shares? Because cost of aquisition of these bonus share is considered 0. (This is important only from taxation) You c…