Synopsis
Reliance Industries received shareholders' approval for 1:1 bonus share and increased authorized share capital. The total percentage of votes cast in favor of the bonus issue resolution was 99.92% with just 0.07% votes against it.
ETMarkets.com Oil-to-retail conglomerate Reliance Industries (RIL) has fixed Monday, October 28, 2024 as the record date for determining shareholders eligible for the issue of 1:1 bonus shares, for which it got approval from shareholders. The company in a filing to the stock exchanges also said that it has received shareholders' approval for increasing its authorised share capital.
The total percentage of votes cast in favour of the bonus issue resolution was 99.92%, with just 0.07% votes against it.
As for the increase in authorised share capital and consequent alteration to the Capital Clause of the Memorandum of Association, 98.96% votes were cast in favour of the resolution while 1.04% were against it.
The authorised share capital of the company is Rs 50,000 crore only consisting of 4,900 crore equity shares of Rs 10/ each and 100 crore preference shares of Rs 10/ share each.
The Mukesh Ambani-led company had announced the issuance of bonus shares in a 1:1 ratio in its 28th annual general meeting (AGM).
"We are in the business of creating wealth for India and enhancing the quality of life of every Indian, every single day," Ambani had said at the AGM, adding that when Reliance grows, shareholders are rewarded handsomely.
"The bonus shares will be issued out of securities premium account received in cash and/or general reserve and/or retained earnings available as of March 31, 2024," RIL had said in a regulatory filing. The corporate action will lead to an increase in the authorised share capital of the company from Rs 15,000 crore to Rs 50,000 crore, ET had then reported.
What does a bonus share issue mean for RIL shareholders?
A 1:1 bonus issue means that RIL's 35 lakh shareholders will get 1 free share against every existing share. For example, if you own 1,000 RIL shares, you will end up owning 2,000 shares.However, bonus issues lead to no change in investment value as share prices get adjusted accordingly.
Bonus issues typically improve the liquidity of the stock as a wider base of investors get access to the counter.
"Reliance as a conglomerate has consistently rewarded its shareholders by offering these bonus opportunities as they believe in long-term growth and value of both the investors and the company to achieve success. The bonus share issue is a sign of the company's financial strength and its commitment to returning value to shareholders. The increased liquidity and potential for future value appreciation are likely to outweigh any negative impact on the share price," said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.
RIL bonus issue history
In the past, RIL has given bonus shares 5 times, beginning with a 3:5 bonus issue in 1980 and 6:10 in 1983. The last three bonus issues in 1997, 2009, and 2017 have been in the ratio of 1:1.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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