Reliance Industries Bonus Shares Record Date : Complete Info
Reliance Industries sets record date for 1:1 bonus share issue. Full details inside.
Reliance Industries Ltd (RIL) has set the record date for its 1:1 bonus share issue. In a late filing on Wednesday, the Mukesh Ambani-led conglomerate announced, “We wish to inform that the Company has designated Monday, October 28, 2024, as the Record Date to determine the equity shareholders eligible for the bonus equity shares of the Company.
RIL is one of the largest Indian conglomerates with business segments as refineries and petrochemicals, petroleum, oil & gas exploration, telecommunications, retail and many more. RIL has always been on the forefront of defining the economy of India, driving innovation in various sectors, and creating unprecedented wealth for its stakeholders in the past few years. While choosing various measures to increase the shareholders’ value, RIL frequently and actively uses bonus shares issued as one of the tools.
Stock issues are particularly pleasing to shareholders, especially if they are offered by the company due to favorable financial position. During the.cost cut exercise under Mukesh Ambani, the Reliance Industries bonus shares several times to ensure that investors are fully satisfied as the equity base is boosted. Bonus issues are a part of corporate finance, and this blog unpacks the mechanics, history, and impacts of bonus shares with reference to Reliance Industries.
What Are Bonus Shares ?
In other words, the bonus share is a share given out to shareholders at no cost on the basis of the shares they already own. In other words, the business transforms well-earned surplus, retained earnings or reserves into share capital and dispenses extra stocks to stockholders on a ratio basis. Bonus shares are typically issued in ratios such as 1:Could be 1 (one Bonus Share for every existing share) or 2 (two bonus shares for every existing share).
For example: If a company comes with a 1:1 bonus share, an existing shareholder with 100 shares will get 100 more shares. The investor’s total holding will then be 200 shares though often the market price per share will reduce to cater for the increased number of shares.
Bonus shares are thus used in a company for the purpose of getting more out of the free reserves of the firm. However, bonus shares have no direct impact on the overall value of the stock a holder owns in the short run even though it gives clues of corporate confidence in the ability to generate growth.
Reliance Industries Bonus Shares Record Date
Reliance Industries Bonus Shares Record Date Issue : Market expected that Reliance should have released bonus issue record date on Monday, October 28, 2024. However, they were let down when the company failed to give any clue about corporate action. Reliance has announced a bonus issue ratio of 1:1 in August month. Bonus issue ratio means, for every 1 (one) fully paid up equity share of Rs. 10/- each held by the shareholder in the company’s record date shall be entitled to 1 (one) fully paid up equity share of Rs. 10/- each.
Last month, on September 5, Reliance claimed, ‘This is going to be the largest bonus equity issuance in India’s equity market ever. The issuance and listing of bonus shares will occur in the course of the festive season for India and is meant to be the group’s early Diwali Gift to all the shareholders. Therefore the record date for shareholders is anticipated in October. Earlier, last week, the oil-to-telecom conglomerate had set October 7th as the date when those investors can call money on partly paid-up shares to convert them into fully paid-up instruments. It is as such that many investors will be looking for bonus shares by reliance industries issue.
Bonus Shares by Reliance Industries : Why Do Companies Offer Them?
Bonus shares are issued for several reasons:
Rewarding Shareholders: That is why many corporations use bonus shares in order to retain those shareholders who have invested in their firm for a long time. In return, shareholders feel the positive effect in the sense that when a company’s share price declines, it means that one can own many of such shares.
Enhancing Liquidity: The advantage of a bonus issue is that more shares are floated in the market, and stock becomes cheaper for small investors and more liquid.
Reinvestment of Retained Earnings: Bonus shares are used to convert retained earnings or reserves into share capital which can help to keep the right capital structure of the company in proper balance without issuing cash.
Improving Market Sentiment: Bonus shares raise investor confidence since stockholders can only be issued from retained profits implying that the company is in a strong position financially.
Reliance Industries Bonus Shares Record Date : History
In the absence of the retention of profits, Reliance Industries has been active in the past in giving bonus shares to its stockholders and thereby leading to the development of a strong equity base of the company apart from keeping intact its loyal investors. The process of bonus shares has looked several decades behind which RIL has given due to its sound operational results, business expansion plan, and free cash flows generation capability.
Reliance Industries Bonus Shares Record Date for the Past Several Years
Reliance has issued bonus shares multiple times over the years, most notably in the years:
1983- 3:5 bonus shares
1997- 1:1 bonus shares
2009- 1:1 bonus shares
2017- 1:1 bonus shares
Now let us look at these bonus issues and the reason for them in more details.
1983 Reliance Bonus Share Issue
This is not the first bonus share from Reliance Industries. In 1983, Reliance Industries issued bonus shares in a 3:5 ratio. This was one of the important times in the development of the company because it grew rapidly and became one of the important players in the growing industrial giant of India. At that time, the bonus issue meant confidence in the company’s potential to use some of its profits for expansion.
1997 Reliance Bonus Share Issue
The next major Reliance Bonus Share Industries came in 1997, in a 1:1 ratio. It was unusual because this stringent bond issuance came at the time when Reliance was gearing up for the new ventures into petrochemicals, refining and telecommunication. RIL was in the process of cementing its position as a broad based corporate giant and the bonus issue was viewed as the next step in this diversification strategy to demonstrate its long term strategic direction. These years signify the company’s golden age where it embarked on capital investment on constructing state of the art petrochemical plants and refineries to give it the commanding heights in this sector.
2009 Reliance Bonus Share Issue
Reliance Industries declared another 1:1 bonus share in 2009 and that Year the company has achieved a lot. This was the first bonus issue in 12 years and came at a time when Reliance was gaining ground on the global market having shown quite a good performance in refining and petrochemicals business. A bonus issue was declared in March 2009 accompanied by a sharp rise of Reliance group’s revenues and profitability, though the organization experienced the impact of the global economic crisis of 2008-09 to an extent. This was supposed to subsidize the shareholders during the worst of times and keep faith with investors.
2017 Reliance Bonus Share Issue
The most recent bonus issue by Reliance Industries took place in 2017, with a 1:1 ratio. This bonus issue was issued at the time when the company was coming out into the telecom business with the organization of Reliance Jio that revolutionized the telecom industry in India. During this period, Reliance also expanded its retail and digital services companies to new high levels. Bonus shares being declared in 2017 were expected to move due to the firm’s strength and its eagerness to pass on operations gains back to shareholders.
Effects of Bonus Shares for Shareholders
To shareholders, bonus shares have advantages in the short run and the long run as well. Let’s look at the key implications:
- Holding Up More Without a Capital Boost
The first advantage which is usually very obvious when discussing bonus shares is the fact that these shareholders get new shares without paying any amount of cash. For instance, if a shareholder owns 100 shares of Reliance and the company declares a 1:Whereas; With 1 bonus issue, the shareholder will get an extra 100 shares. There is however the possibility that the market price of the shares go down after the bonus issue though in the case of the Malaysian experience, the total value of the shareholder’s investment remains fixed at least in the short run.
- Improved Liquidity
As a result, bonus issues create more shares, and because they are more liquid, the stock also becomes more liquid. It may also result in increased volume of trades, improved working spread and enhanced price formation in the trading market. More importantly, liquidity is very useful to the small investor because he/she can easily purchase and sell a share without affecting the market price significantly.
- A psychological booster to Investors
Bonus shares are generally well received mostly because investors believe they are receiving a ‘blessing’ from the company. Although from a financial point of view bonus issue may simply cancel out the money(effect may take a long time) then again, it stimulates the investor psychology to think in terms of the company’s future.
- Increased no. of shares for long-term capital gains
More shares boost the likelihood of future gains by as many folds making bonus shares appealing more than most other stock strategies. If ever the company performs well in the stock market the investor equally has an advantage since he owns a large number of shares in the company. As in the case of Reliance Industries the stock of this company has brought whopping long term gains though bonus shares are good stock investment options for long term investors.
- Tax Considerations
As far as taxation is concerned, the shareholders do not incur any liability to tax in respect of the receipt of bonus shares. However, on sale of the bonus shares, capital gains tax is attracted depending on the period of holding. Like any other shares, bonus shares are charged the same tax laws but the initial cost of the shares is nil. Therefore, all of the selling price is considered as a capital gain when taxed.
Conclusion
It is for this reason that Reliance Industries has over the years had a policy of issuing bonus shares thus showing the financial performance of this organization and its ability to foster shareholders’ gains. The boosts often have not only served to serve shareholders but have also helped increase the float and the public‘s ability to trade the company’s stock. Earning from bonus shares as business immunity, such as from Reliance, is an excellent dividend for long-term investors who want to tap in directly to the improvement of the particular company.
Since Reliance is today a corporation operating across various segments, the shareholders can expect even more such benefits in the succeeding years. Although bonus shares do not enhance the fortunes of the shareholders in the short-term and do not add any additional value to shareholder’s investments, it surely contributes a great deal in the longer run realization of capital appreciation for investors especially if one buys stock like Reliance Industries Limited.
Also Read : Upcoming Big IPO in India
FAQ'S
What are bonus shares by reliance industries ?
Bonus shares by reliance industries are additional shares given to existing shareholders at no cost, based on the number of shares they own.
What is the reliance industries bonus shares record date ?
The record date is the cutoff date to determine which shareholders are eligible to receive the bonus shares.
Can I sell Reliance Bonus Share ?
Yes, once the Reliance Bonus Share is credited to your Demat account, you can sell them like regular shares.
How will the share price change after reliance industries bonus shares are issued ?
The share price will decrease proportionally, but the total value of your holdings remains the same.
