The country’s largest and most trusted insurance company, Life Insurance Corporation of India (LIC) is preparing to give a big gift to its investors. This gift is going to be given in the form of ‘free shares’ i.e. bonus shares. As soon as this buzz intensified in the market, tremendous buying was seen in LIC shares on Wednesday, April 8. The company’s shares jumped by more than 7 percent and reached the level of Rs 803.40.
This ‘free’ gift is being received for the first time
Shareholders were waiting for this day since its listing in the market. Since entering the stock market in the year 2022 LIC has definitely filled the pockets of its investors by giving dividends from time to time, but this will be the first opportunity to give bonus shares. The company has confirmed this in an official information (exchange filing) given to the stock market on April 7. An important meeting of the company’s board of directors is going to be held next week, on Monday, April 13, to give the final approval to this proposal. In this meeting, it will be considered how these free shares will be distributed to the investors.
Who will get the benefit of this opportunity?
Now the question arises whether every person who buys shares from the market today will get this free share? The answer lies in ‘record date’. The benefit of bonus shares is given by any company only to those investors who have shares of the company in their demat account till a fixed date. This cut-off date is called ‘record date’ in market language. This record date will be announced in the board meeting to be held on 13th April. That is, any person who remains a shareholder of LIC till that declared date will be entitled to this free share.
Why are bonus shares distributed?
This question often comes in the mind of common investors that why any company distributes its shares for free. In fact, when companies accumulate a large amount of free reserves, they use it to increase their paid-up capital and balance their earnings per share (EPS). Through this entire process the company reduces its reserves and issues new shares to the investors without charging any extra fee. Because investors do not have to pay any money from their own pocket for this, hence these are called free shares.
How much bonus will be given on how many shares?
Bonus shares are always issued in a fixed ratio. This ratio can be in any form like 1 for 1, 2 for 1 or 1 for 10. At present LIC has not disclosed this ratio. The eyes of the shareholders are now directly fixed on the meeting of April 13, from where it will be clear how many additional shares they are going to get on their existing investment.
Also read- Lic Scheme: On saving Rs 45, you will get full Rs 25 lakh, along with free life insurance!