The main consideration in determining the dividend policy is the objective of maximisation of wealth of shareholders. Thus, a firm should retain the earnings if it has profitable investment opportunities, giving a higher rate of return than the cost of retained earnings, otherwise it should pay them as dividends. It implies that a firm should treat retained earnings as the [...]
This article throws light upon the four main factors responsible for success of right issue. The factors are: 1. Condition of Investment Market 2. Effect of Rights Issue on Earning per Share 3. Size of Rights Issue 4. Pricing of the Rights Issue. Success of Right Issue: Factor # 1. Condition of Investment Market: It is primarily the attraction of [...]
This article throws light upon the four main guidelines for the issue of bonus shares. The guidelines are: 1. Conditions for Bonus Issue 2. Restriction on Bonus Issue 3. Bonus Shares only against Reserves, etc. if Capitalised in Cash 4. Completion of Bonus Issue. Guideline # 1. Conditions for Bonus Issue: Subject to the provisions of the Companies Act, 1956 [...]