RIL's bonus issue receives board approval; Reliance Industries shares respond

Reliance Bonus Shares: The Mukesh Ambani-led company announced that the record date for the bonus issue will be communicated separately. Following this update, RIL shares were trading 1.54% lower at Rs 2,983.10 on the BSE.

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 shares are issued exclusively to existing shareholders, reducing the company's free reserves and surplus while increasing the number of outstanding equity shares. This corporate action typically leads to a decrease in per share metrics such as EPS and book value per share, resulting in a proportional reduction in share price based on the number of bonus shares issued.

In a filing to stock exchanges, Reliance Industries stated that its board of directors has recommended to shareholders, for approval via postal ballot, the issuance of bonus shares in the ratio of 1:1. This means 1 new fully paid-up equity share of ₹10 each will be issued for every 1 existing fully paid-up equity share of ₹10 each to eligible equity shareholders as of the record date. The issuance will be funded by capitalizing the securities premium received in cash, general reserve, or retained earnings.

Reliance Industries announced that the bonus shares will be issued from the securities premium account received in cash, general reserve, and retained earnings available as of March 31, 2024.

RIL's most recent bonus issue occurred in 2017, with the stock rising 318 percent since then, reaching approximately ₹3,015 on Wednesday from ₹725.65 on September 7, 2017, the ex-date for the 1:1 bonus issue. The company had also announced a similar 1:1 bonus share ratio for its 2009 issue, which turned ex-date on November 26 that year. In 1997, a 1:1 bonus was declared, while in 1983, the bonus shares were offered in a 6:10 ratio, and in 1980, in a 3:5 ratio. Additionally, Reliance has conducted five rights issues, with the most recent one in May 2020.

Additionally, the RIL board has sought shareholders' approval to increase the company's authorised share capital from ₹15,000 crore to ₹50,000 crore. The board also approved the forfeiture of partly paid-up equity shares of RIL if call money (whether first call, second and final call, or both) remains unpaid. This forfeiture will take effect if the payment of call money is not made by September 20, 2024, RIL stated.

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