Autoriders International had earlier announced a bonus issue in the ratio of 5:1, meaning shareholders will receive five additional equity shares for every one share held on the record date. The corporate action is part of the company’s approved plan communicated to the exchanges.
A bonus issue is a corporate action in which a company issues additional shares to existing shareholders without any additional cost. These shares are issued by capitalising the company’s free reserves.
Bonus issues increase the number of shares held by an investor while keeping the overall value of the investment unchanged immediately after the issuance, as the share price typically adjusts proportionately on the ex-bonus date.
In the case of Autoriders International’s 5:1 bonus ratio, for every 1 share, the shareholder will receive 5 extra shares.
Impact on Investor Holdings
For an investor holding 10 shares of Autoriders International as of the record date, the 5:1 bonus issue will result in:
- Existing shares: 10
- Bonus shares received: 10 × 5 = 50
- Total shares post-bonus: 60
The increase in the number of shares does not require any action from the investor; the credited bonus shares appear automatically in the demat account on or after the allotment date, as notified by the company.
Ex-date and eligibility
The ex-bonus date, November 18, is the date from which the stock trades without the entitlement to receive bonus shares. Investors must ensure that their purchase is completed today, allowing for settlement through the T+1 cycle, to be recognised as shareholders on the record date.
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