No, not everyone gets bonus shares. Eligibility for bonus shares is restricted to specific shareholders who meet certain criteria set by the company issuing them.
Bonus shares are additional shares issued by a company to its existing shareholders without any cost, typically from its reserves. This is a common method for companies to reward their shareholders and increase liquidity in their stock while conserving cash. However, to receive these shares, shareholders must own the company's stock by particular deadlines.
Understanding Bonus Share Eligibility
The key to receiving bonus shares lies in the ownership of shares by specific dates determined by the company. These dates ensure fairness and clarity regarding who is entitled to the bonus issue.
Key Eligibility Dates
Two critical dates govern the eligibility for bonus shares: the Record Date and the Ex-Date.
- Record Date: This is the specific date set by the company on which its records are checked to identify all eligible shareholders. If you are registered as a shareholder in the company's books on this date, you qualify for the bonus shares.
- Ex-Date: This is the date from which a stock trades without the entitlement to the bonus issue. If you purchase shares on or after the ex-date, you will not be eligible to receive the bonus shares.
It's important to understand the relationship between these dates. For instance, in India, which follows a T+2 rolling system for the delivery of shares (meaning trades settle two business days after the transaction), the ex-date is typically two days ahead of the record date. This allows sufficient time for shares bought before the ex-date to be delivered to your account and registered in your name by the record date.
Here’s a breakdown of how these dates interact:
| Date Type | Definition | Eligibility Impact |
|---|---|---|
| Ex-Date | The date from which the stock trades without the right to the bonus shares. | If you buy shares on or after this date, you will not receive the bonus shares. You must buy before this date. |
| Record Date | The official date on which the company checks its records to identify eligible shareholders. | You must be registered as a shareholder in the company's books on this date to be eligible for bonus shares. |
Who Is Not Eligible for Bonus Shares?
Based on these criteria, the following individuals would generally not be eligible:
- New Shareholders (Post-Ex-Date): Anyone who purchases shares on or after the ex-date will not receive the bonus shares, as the shares bought at this point no longer carry the bonus entitlement.
- Non-Shareholders: Individuals who do not own shares of the company at all are, by definition, not eligible for bonus shares.
- Shareholders Who Sell Early: Even if someone owned shares before the ex-date, if they sell their shares before the record date, they will not be registered as a shareholder on the record date and thus will not receive the bonus shares. The buyer of those shares (if the transaction settles by the record date) would then become eligible.
In essence, bonus shares are a benefit exclusively for existing, registered shareholders who hold their shares through the specified eligibility dates.
