02-08-2009, 05:51 AM
Reply from Kamran......to Faisal...
It's a long discussion that how much benefits stock dividend (bonus shares) have over the cash dividend. The major benefits for companies are to save cash outflow, increase market capitalization, conversion of reserves into capital in order to avoid monoply law issues and avoidance of dilution of shareholders.
The benefits to shareholders are to save tax as dividend is subject to tax and zakat while gains on sale of shares (as well as bonus shares) of listed companies are exempt from tax in Pakistan. Dividend's value cannot increase after these are declared but bonus shares of listed companies are marketable security and their prices can fluctuate and a wise holder can make further profits/gains out of it using market rise prudently.
All shareholders don't feel that their voting rights have been affected since every one gets same percentage of bonus shares on their existing holding. A long list of such points could be gathered.
You can go on following links to explore further. http//learning.vinnsworld.com/financial_management/bonus_shares.html
http//www.wisegeek.com/what-is-a-bonus-share.htm
http//www.slideshare.net/sagar_sjpuc/bonus-shares-presentation
http//ezinearticles.com/?Stock-and-Shares---Benefits-and-Gains&id=1358757 http//www.rediff.com/money/2004/apr/15perfin1.htm
I advise you to search such things on www.google.com, you will find so much of the desired info. Regards,
KAMRAN.
It's a long discussion that how much benefits stock dividend (bonus shares) have over the cash dividend. The major benefits for companies are to save cash outflow, increase market capitalization, conversion of reserves into capital in order to avoid monoply law issues and avoidance of dilution of shareholders.
The benefits to shareholders are to save tax as dividend is subject to tax and zakat while gains on sale of shares (as well as bonus shares) of listed companies are exempt from tax in Pakistan. Dividend's value cannot increase after these are declared but bonus shares of listed companies are marketable security and their prices can fluctuate and a wise holder can make further profits/gains out of it using market rise prudently.
All shareholders don't feel that their voting rights have been affected since every one gets same percentage of bonus shares on their existing holding. A long list of such points could be gathered.
You can go on following links to explore further. http//learning.vinnsworld.com/financial_management/bonus_shares.html
http//www.wisegeek.com/what-is-a-bonus-share.htm
http//www.slideshare.net/sagar_sjpuc/bonus-shares-presentation
http//ezinearticles.com/?Stock-and-Shares---Benefits-and-Gains&id=1358757 http//www.rediff.com/money/2004/apr/15perfin1.htm
I advise you to search such things on www.google.com, you will find so much of the desired info. Regards,
KAMRAN.