Bonus shares are additional shares issued to existing shareholders without requiring additional payment. They are allotted by capitalizing a company's reserves and profits. Issuing bonus shares does not affect the total capital structure or shareholders' earnings, but increases the number of outstanding shares. Companies issue bonus shares to bring the share price to a more reasonable level, promote trading, and signal to shareholders that prospects have brightened. Regulations require bonus shares be issued from free reserves of at least 40% of increased paid up capital. While bonus shares have tax benefits for shareholders and signal future profits, they also increase capitalization pressure on companies to maintain earnings.
Let's today to know something about Dividend...... A dividend is an extra income to dividend holder which totally tax-free in hands of Receiver which is considered the source of income.
Let's today to know something about Dividend...... A dividend is an extra income to dividend holder which totally tax-free in hands of Receiver which is considered the source of income.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. In a right offering, each shareholder receives the first right to subscribe to the shares at the discount as compared to the prevailing share price.
This ppt. includes brief about the Memorandum of Association (MOA) and Clauses of Regulatory Framework of Companies :-
1.Introduction, meaning and importance of MOA
2.Purpose of MOA and Contents
3 Clauses of MOA well defined and tuned
The dividend policies of an organization have a significant bearing on the market value of stocks. Companies must distribute dividends in line with the industry standards and previously distributed dividends by the company. The shareholders will otherwise perceive this variability negatively. It casts suspicion on the financial health and motives of the management (signaling effect). In aggregate, an inefficient dividend decision mechanism would adversely impact the valuation of the company.
Table of Contents
What are Dividend Decisions?
Impact of Dividend Decisions on Price
Factors affecting Dividend Decisions
Cash Requirement
Evaluation of Price Sensitivity
Stage of Growth
Good Dividend Policy
Importance of Dividend Decisions
Q. How much Dividend should a Company Distribute to its Shareholders?
Q. What will be the Impact of Dividend Decisions on the Share Prices of the Company?
Q. What is the Consequential Impact of Inability to Maintain Dividend Year after Year?
Types of Dividend Decision
Stable Dividends
Constant Dividends
Alternate Dividend Decisions
Factors affecting Dividend Decisions
Cash Requirement
The financial manager must take into account the capital fund requirements while framing a dividend policy. Generous distribution of dividends in capital-intensive periods may put the company in financial distress.
Evaluation of Price Sensitivity
Companies chosen by investors for their regularity of dividends must have a more stringent dividend policy than others. It becomes essential for such companies to take effective dividend decisions for maintaining stock prices.
Stage of Growth
Dividend decisions must be in line with the stage of the company- infancy, growth, maturity & decline. Each stage undergoes different conditions and therefore calls for different dividend decisions.
Good Dividend Policy
What Constitutes a Good Dividend Policy?
There does not exist a single dividend decision process that works for every organization. A decision suitable for one company may prove fatal for another company. For example, businesses with a consistent order book such as telecom and banking are expected to pay regular dividends. It may impact the stock prices if they do not pay dividends regularly. On the contrary, sectors of pharmaceutical and technology are highly research-oriented. These require huge cash expenses to further their operations. Therefore they cannot afford to pay a regular dividend. Investors of such stocks earn income mainly through capital appreciation. In essence, there are a lot of factors affecting dividend policy or decisions.
We can refer to the following renowned theories on Dividend Policy:
Modigliani- Miller Theory on Dividend Policy
Gordon’s Theory on Dividend Policy
Walter’s Theory on Dividend Policy
A good financial manager must, therefore, answer the following questions before taking crucial dividend decisions
Importance of Dividend Decisions
While deciding the distribution of dividends, management has to answe
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. In a right offering, each shareholder receives the first right to subscribe to the shares at the discount as compared to the prevailing share price.
This ppt. includes brief about the Memorandum of Association (MOA) and Clauses of Regulatory Framework of Companies :-
1.Introduction, meaning and importance of MOA
2.Purpose of MOA and Contents
3 Clauses of MOA well defined and tuned
The dividend policies of an organization have a significant bearing on the market value of stocks. Companies must distribute dividends in line with the industry standards and previously distributed dividends by the company. The shareholders will otherwise perceive this variability negatively. It casts suspicion on the financial health and motives of the management (signaling effect). In aggregate, an inefficient dividend decision mechanism would adversely impact the valuation of the company.
Table of Contents
What are Dividend Decisions?
Impact of Dividend Decisions on Price
Factors affecting Dividend Decisions
Cash Requirement
Evaluation of Price Sensitivity
Stage of Growth
Good Dividend Policy
Importance of Dividend Decisions
Q. How much Dividend should a Company Distribute to its Shareholders?
Q. What will be the Impact of Dividend Decisions on the Share Prices of the Company?
Q. What is the Consequential Impact of Inability to Maintain Dividend Year after Year?
Types of Dividend Decision
Stable Dividends
Constant Dividends
Alternate Dividend Decisions
Factors affecting Dividend Decisions
Cash Requirement
The financial manager must take into account the capital fund requirements while framing a dividend policy. Generous distribution of dividends in capital-intensive periods may put the company in financial distress.
Evaluation of Price Sensitivity
Companies chosen by investors for their regularity of dividends must have a more stringent dividend policy than others. It becomes essential for such companies to take effective dividend decisions for maintaining stock prices.
Stage of Growth
Dividend decisions must be in line with the stage of the company- infancy, growth, maturity & decline. Each stage undergoes different conditions and therefore calls for different dividend decisions.
Good Dividend Policy
What Constitutes a Good Dividend Policy?
There does not exist a single dividend decision process that works for every organization. A decision suitable for one company may prove fatal for another company. For example, businesses with a consistent order book such as telecom and banking are expected to pay regular dividends. It may impact the stock prices if they do not pay dividends regularly. On the contrary, sectors of pharmaceutical and technology are highly research-oriented. These require huge cash expenses to further their operations. Therefore they cannot afford to pay a regular dividend. Investors of such stocks earn income mainly through capital appreciation. In essence, there are a lot of factors affecting dividend policy or decisions.
We can refer to the following renowned theories on Dividend Policy:
Modigliani- Miller Theory on Dividend Policy
Gordon’s Theory on Dividend Policy
Walter’s Theory on Dividend Policy
A good financial manager must, therefore, answer the following questions before taking crucial dividend decisions
Importance of Dividend Decisions
While deciding the distribution of dividends, management has to answe
This ppt is prepared to make familiar with the dividend policy which includes Types of Dividend policy, Procedure for declaring dividend, Why do companies declare dividend
A bonus issue is a stock dividend, allotted by the company to reward the existing shareholders without receiving any additional payment from them, it is known as issue of bonus shares
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
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Kseniya Leshchenko: Shared development support service model as the way to make small projects with small budgets profitable for the company (UA)
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Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
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[Note: This is a partial preview. To download this presentation, visit:
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
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1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
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To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
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Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
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What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
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As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
1. Bonus Shares
Bonus Share
When the additional shares are allotted to the existing shareholders without
receiving any additional payment from them, it is known as issue of bonus
shares.
Bonus shares are allotted by capitalizing the reserves and surplus.
Issue of bonus shares results in the conversion of the company's profits into
share capital. Therefore it is termed as capitalization of company's profits.
Since such shares are issued to the equity shareholders in proportion to their
holdings of equity share capital of the company, a shareholder continues to retain
his / her proportionate ownership of the company.
Issue of bonus shares does not affect the total capital structure of the company.
It is simply a capitalization of that portion of shareholders' equity which is
represented by reserves and surpluses.
It also does not affect the total earnings of the shareholders.
Issue of Bonus Shares is more or less a financial gimmick without any real
impact on the wealth of the shareholders. Still firms issue bonus shares and
shareholders look forward to issue of bonus shares.
Reasons for issuing Bonus Shares
1. The bonus issue tends to bring the market price per share within a more
reasonable range.
2. It increases the number of outstanding shares. This promotes more active
trading.
3. The nominal rate of dividend tends to decline. This may dispel the impression
of profiteering.
4. Share capital base increases and the company may achieve a more
spectacular size in the eyes of the investing company.
5. Shareholders regard a bonus issue as a strong indication that the prospects of
the company have brightened and they can reasonably look for an increase in
total dividend.
6. It improves the prospects of raising additional funds.
Regulation of Bonus Issues
Important regulatory provisions governing issue of bonus shares are:
1. The bonus issue is made out of free reserves built out of the profits or share
premium collected in cash only.
2. The residual reserves after the proposed capitalization shall be at least 40% of
2. the increased paid up capital.
Stock Splits
In a stock split the face value per share is reduced and the number of shares is
increased proportionately.
A stock split is similar to a bonus issue from economic point of view. But there
are some differences from the accounting point of view.
Difference between Bonus Issue and Stock Split
Bonus Issue Stock Split
1. The par value of share is unchanged. 1. The par value of share is reduced.
2. A part of the reserves is capitalized. 2. There is no capitalization of reserves.
Advantages of issue of bonus shares to the company
1. Conservation of Cash:
Issue of bonus shares does not involve cash outflow. The company can retain
earnings as well as satisfy the desire of the shareholders to receive dividend.
2. Keeps the EPS at a reasonable level:
A company having high EPS may face problems both from employees and
consumers.
Employees may feel that they are underpaid.
Consumers may feel that they are being charged too high for the company's
products.
Issue of bonus shares increases the number of shares and reduces the earning
per share.
3. Increases the marketability of company's shares:
Issue of bonus shares reduces the market price per share. The price of the share
may come within the reach of ordinary investors. This increases the marketability
of shares.
4. Enhances prestige of the company:
By issuing bonus shares, the company increases its credit standing and its
borrowing capacity. It reflects financial strength of the company.
5. It helps in financing its projects:
By issuing bonus shares, the expansion and modernization programmes of a
company can be easily financed. The company need not depend on outside
agencies for finances.
6. Retention of managerial control:
Any new issue of shares has a danger of dilution of managerial control over the
company.
3. Since bonus shares are issued to the existing shareholders in proportion to their
current holdings, there is no threat of dilution of managerial control over the
company.
Advantages to the shareholders
1. Tax benefits:
When a shareholder receives dividend in cash, it adds to his total income and is
taxed at usual income tax rates.
From this point of view the bonus shares increase the wealth of shareholders. In
case the shareholder requires cash he can sell his additional shares.
2. Indication of higher future profits:
Issue of bonus shares is generally an indication of higher future profits.
This is because a company declares a bonus issue only when its earnings are
expected to increase.
3. Increase in future dividend:
The shareholder will get more dividends in the future even it the company
continues to offer existing cash dividend per share.
4. High psychological value:
Issue of bonus shares is usually perceived positively by the market. This tends to
create greater demand for the company's shares. In fact, always the share prices
rise at the declaration of bonus shares.
Limitations of Bonus Issues
Disadvantages for the company:
1. Issue of bonus shares leads to an increase in the capitalization of the
company. The increased capitalization can be justified only if there is increase in
the earning capacity of the company.
2. After the issue of the bonus shares the shareholders expect the existing rate of
dividend per share to continue. It is really a challenging task for the company to
retain the existing rate of dividend per share.
3. Issue of bonus shares prevents new investors from becoming the
shareholders of the company (no doubt they can buy the shares in the secondary
market).
Disadvantages to the shareholders:
1. Some shareholders may prefer cash dividend to stock dividend, such
shareholders may feel disappointed (no doubt they can very well sell their bonus
shares and get their money).