Reliance Industries Ltd (RIL) on Thursday said its board has approved a proposal to issue bonus shares in the 1:1 ratio. This marked the sixth bonus issue by the most valued firm on Dalal Street. The Mukesh Ambani-led company said the record date for the same will be intimated separately. Following the development, RIL shares were trading 1.54 per cent lower at Rs 2,983.10.
Bonus is issued only to the existing shareholders. It reduces free reserves and surplus of the company but increases the number of outstanding equity shares. The corporate action leads to fall in per share ratios such as EPS and book value per share. As a result, it reduces share price in proportion to number of bonus shares issued.
In a filing to stock exchanges, Reliance Industries said its board of directors have recommended to the shareholders for their approval, through postal ballot: “The issue of bonus shares in the ratio of 1:1 i.e. 1 (one) new fully paid-up equity share of ₹ 10/- (Rupees Ten Only) each for every 1 (one) existing fully paid-up equity share of ₹ 10/- (Rupees Ten only) each, to the eligible equity shareholders of the company as on the record date, by capitalisation of securities premium received in cash and / or general reserve and / or retained earnings.”
Reliance Industries said the bonus shares will be issued out of securities premium account received in cash and / or general reserve and / or retained earnings available as at March 31, 2024.
RIL’s last bonus issue came in the calendar 2017, with the stock climbing 318 per cent since then, to Rs 3,015-odd level on Wednesday from Rs 725.65 level on September 7, 2017, the day it turned ex-date for the 1:1 issue. Reliance Industries had announced a similar bonus share ratio for its 2009 issue. The stock turned ex-date on November 26 that year. The 1997 bonus issue was declared in the 1:1 ratio. The 1983 bonus shares were offered in the 6:10 ratio and 1980 in the 3:5 ratio. Besides, the company came out with five rights issue, the last one in May 2020.
Meanwhile, the RIL board also sought shareholders’ approval for an increase in the authorised share capital of the company from Rs 15,000 crore to Rs 50,000 crore.
It approved forfeiture of partly paid-up equity shares of RIL, on which call money (first call or second and final call or both), remains unpaid. The forfeiture will be effected in case the payment of call money is not made on or before September 20, 2024, RIL said.