Understanding the hidden cost associated with bonus share
Bonus shares are a common topic in Nepal's stock market, offering excitement among investors. Investors are also usually misguided by saying bonus shares are issued free of costs. The issuance of bonus shares to meet specific requirement can be commendable but issuance of bonus shares in the name of just increasing share do cost shareholders wealth and company's resources. This article takes a deep drive into the cost of bonus shares and procedures and impacts of bonus shares. What is bonus share? A bonus share is an additional share issued by a company to its existing shareholders, in proportion to their holdings. This essentially increases the number of shares outstanding for the company. Why do company issue bonus share? Companies may issue bonus shares for several reasons: Rewarding Shareholders without Cash: When a company has good profits but limited cash reserves, issuing bonus shares can be a way to reward shareholders without depleting their c...