Bonus shares alert: Auto component company to consider bonus issue

As per the small-cap auto component company’s stock market exchange communication, “Pursuant to the Regulation 29 of the SEBl (Listing obligations and Disclosure Requirements)

Regulations, 2015, we hereby inform that 2/22-23 Meeting of the Finance committee of the Board of Directors of the company is scheduled to be held on August 19, 2022 inter-alia; to consider the issue of Bonus Shares to the members of the Company by way of capitalization of reserves.”

“Further, in terms of the Code for Prevention of lnsider Trading read with the SEBI (Prohibition of lnsider Trading) Regulations, 2015, the “Trading window” for dealing in the shares of the Company for- Promoters/Promoter Group/ Directors/Key Managerial Personnel/Designated Persons/Connected Persons of the company shall be closed from Tuesday, August 16, 2022 till the period ending 48 (forty eight) hours after the date of receipt of trading approval for the said Bonus Shares from the concerned Stock Exchanges (both days inclusive),” the small-cap company concluded.

This announcement of bonus shares can be a big relief for shareholders of the company as the stock has delivered just over 3 per cent return in last one month whereas in last 6 months, it has shed over 5 per cent. In year-to-date (YTD) time, it has appreciated over 4 per cent whereas in last one year it has risen from around ₹125 to ₹170 apiece levels, logging around 20 per cent jump in this period.

Income tax rule on bonus shares

Beneficiaries of the bonus shares must note that they will have to pay income tax on bonus shares. As per the income tax rule, if the bonus shares are issued before 31st January 2018, then cost price of the bonus share will be considered close price of the stock on 31st January 2018. However, inn case of bonus share issuance after 31st January 2018, cost price of the stock will be considered zero. On sale of bonus shares, net income of the shareholder will be calculated after deduction of the cost price from the selling price. In case of bonus shares being hold for less than one year, flat 15 per cent tax will be levied whereas in case of holding bonus shares for more than one year, 10 per cent tax will be levied on the income above ₹1 lakh income.

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