Here is the good news for the shareholders of Muthoot Capital, the company’s board of directors have decided to issue the bonus shares in the ratio of 1:10.
The bonus issue is out of company’s free reserves created out of profits or share premium account. As per the pre-bonus issue data, the company’s share capital contains 1,24,72,575 shares and after the bonus issue it will contain 1,37,19,833.
The company is going to utilise Rs 1,24,72,580 from its free reserves to implement the bonus issue. June 18, 2017 is the estimated date by which bonus issue shares would be created or dispatched.
Generally, companies take the route of bonus issue when they are short of cash since the shareholders may sell the bonus shares and the company’s liquidity needs may get fulfilled.
After the bonus issue, the company’s issued share capital increases which makes investors in the market to perceive the company as a big one and lures them to invest in it.