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Question
Distinguish between the following:
Rights Shares and Bonus Shares
Solution
| Points | Rights Shares | Bonus Shares |
| Meaning | In rights issues, shares are offered to the existing equity shareholders, i.e., the company offers the shareholders the first option to buy the shares of the company. | Bonus shares are issued to the existing equity shareholders free of cost. |
| Payment | Subscribers have to pay for the Rights Shares. The company only gives them the right to buy these shares. | Bonus shares are issued free of cost to the shareholders. |
| Partly/fully paid-up shares | Shareholders have to pay for these shares as Application Money, Allotment, Call Money, etc. till the full money on shares is paid up. | Bonus shares are fully paid-up shares. So no money has to be paid by the shareholders to the company. |
| Minimum Subscription | The company has to obtain a minimum subscription. If the company fails to receive a minimum subscription, it has to refund the entire application money received. | There is no minimum subscription to be collected as Bonus shares are issued free of cost by the company. |
| Right to Renounce | The shareholders can renounce their shares. | Shareholders cannot renounce their bonus shares. |
| Purpose of Issue | The rights issue is done by a company when it wants to raise fresh funds but wants to give a chance to its existing members to increase their shareholding. | When a company has accumulated huge profits or reserves and the company wants to reward its existing equity shareholders, the company issues bonus shares. |
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7. Offered to existing Equity shareholders |
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8. Transfer of shares |
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10. Allotment of shares |
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| Group 'A' |
Group 'B' |
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a) Issued capital |
1) Non-payment of calls |
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c) Bonus shares |
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e) Forfeiture of shares |
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6) First time issue of shares |
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7) Free shares issued to existing equity shareholders |
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8) Maximum capital a company can raise |
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9) Allotment Letter |
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10) Operation of law |
Write a word or a term or a phrase which can substitute the following statement.
Capital collected by way of issue of Equity and Preference shares.
Find the odd one.
Find the odd one.
Select the correct option from the bracket.
(First time offer of shares, Shares offered to public, Shares offered to existing Equity shareholders, Shares offered to existing employees, Transmission of shares)
|
Group 'A' |
Group "B" |
|
a) Public offer of shares |
1) ____________ |
|
b) ____________ |
2) Initial Public offer |
|
c) Rights Issue |
3) ____________ |
|
d) ____________ |
4) ESOS |
|
e) Operation of law |
5) ____________ |
Complete the sentence.
Shares issued free of cost to existing Equity shareholders is called as ______
Answer in one sentence.
With whom should the prospectus be filed before issuing it to the public?
Explain the following term/concept.
Bonus shares
Justify the following statement.
Company has to fulfill certain provisions while making Right Issue.
Justify the following statement.
To Issue Bonus Shares, a company has to fulfill certain provisions.
Justify the following statement.
ESOS is offered by a company to its permanent employees, Directors and Officers
Match the pairs.
| Group A | Group B |
| a) Debenture holders | 1) Secured deposits |
| b) IPO | 2) Owners |
| c) Charge on assets | 3) Any issue after first-time public offer |
| d) SEBI | 4) To protect the interest of investors in securities market |
| e) Issued within two months of allotment of shares | 5) First-time public offer |
| 6) Allotment letter | |
| 7) To protect the interest of companies in securities market | |
| 8) Share certificate | |
| 9) Creditors | |
| 10) Unsecured deposits |
