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Q.

What is the difference between rights and bonus issue ?

Asked by Nikhil, 23 May '10 07:50 am
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Answers (4)

 
1.

Bonus issues are shares issued free of charge to shareholders. When a company accumulates a large fund from profits, much beyond its needs, the directors decide to distribute a part of it among the shareholders in the form of bonus.. Right shares are issued to existing shareholders who have the privilege to buy a specified number of new shares from the firm a specified price within a specified time, the intention is to raise the capital
Answered by jameel ahmed, 24 May '10 07:03 am

 
  
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2.

In right issue one has to pay for the shares allotted and bonus shares are given for free, that is the basic difference in between these two
Answered by iqbal seth, 24 May '10 05:40 pm

 
  
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3.

In Rights Issue, some costs are involved and the shareholders can either subscribe or unsubscribe and Bonus means free additional shares.
Answered by Dharmarajan, 23 May '10 08:45 am

 
  
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4.

Rights Issues are issued to existing shareholders of a company when that company decides to raise more capital via issuing new shares. Existing shareholders are given the "right" to purchase new shares at a discounted price (generally discounted - not always); if they choose not to take this "right" they can instead sell the rights to purchase the shares on a free market to ensure that their net wealth is maintained (as the increase in supply effectively devalues each preexisting share).
Bonus issues are generally associated with an investor being issues with extra shares than what they paid for. This can be as means of maintaining net wealth also (redistribution from company held shares to shareholders etc). This is the issue of an actual share that can then be traded on an open market.

Source: Wikipedia.
Answered by Dinesh Manaktala, 23 May '10 07:59 am

 
  
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