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FAQs on Issue of Right share and Bonus Shares - Class Notes, Commerce, Accounting - B Com

1. What is a right share?
Ans. A right share is a type of share that is offered to existing shareholders of a company in proportion to their existing shareholding. It allows shareholders to purchase additional shares at a discounted price before they are offered to the general public.
2. How are right shares issued?
Ans. Right shares are issued by a company through a formal announcement to its existing shareholders. The announcement includes the number of right shares available, the issue price, and the deadline for shareholders to exercise their rights and purchase the shares.
3. What are bonus shares?
Ans. Bonus shares, also known as scrip dividends or capitalization issue, are additional shares given to existing shareholders of a company without any additional cost. It is a way for companies to distribute their profits or reserves to shareholders by converting them into shares.
4. How are bonus shares issued?
Ans. Bonus shares are issued by a company through a resolution passed by its board of directors and approved by its shareholders. The company converts its accumulated profits or reserves into shares and distributes them to existing shareholders in proportion to their existing shareholding.
5. What is the difference between right shares and bonus shares?
Ans. The main difference between right shares and bonus shares is that right shares require shareholders to purchase additional shares at a discounted price, while bonus shares are given to shareholders for free. Right shares provide an opportunity for existing shareholders to increase their ownership in the company, while bonus shares provide a way for the company to reward shareholders without affecting their ownership percentage.
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