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Government-owned infrastructure finance company in the power sector, REC Ltd will be turning ex-bonus later this week. The company plans to issue bonus shares in the ratio of 1:3 to eligible shareholders and will determine eligible shareholders on the record date. Due to this issue, the PSU will capitalise a sum not exceeding ₹658.30 crore. REC is a subsidiary of Power Finance Corporation (PFC) which is the financial backbone of the country's power sector.
As per the regulatory filing, REC has recommended the issue of bonus shares to the shareholders in the ratio of 1:3, i.e. one bonus equity share of ₹10 each fully paid-up for every three equity shares of ₹10 each fully paid-up, to eligible members by capitalising a sum not exceeding ₹658.30 crore out of the sum standing to the credit of 'Securities Premium Account'.
The shareholders of the company have approved the bonus issue in a postal ballot held between July 11 to August 9, 2022. The result was announced on August 9.
The company has fixed August 18 as the record date to determine eligible members for the bonus shares. Thereby, the company will turn ex-bonus on August 17.
The company plans to complete the bonus issue within two months from the date of approval.
Usually, a company gives bonus shares as a form of incentive which can be called additional shares over the shareholders' existing shares. The ratio of the bonus shares is decided by the company.
In the case of REC, the bonus issue ratio is 1:3 which means one bonus share on the existing three equity shares.
Under the bonus issue, there are various dates such as 'record date', 'ex-date', and 'issue date'.
The record date is the cut-off date on which the listed company makes a note of its shareholding book. All shareholders who hold shares in the company on the record date will be eligible for the benefit.
While the ex-bonus date is the day before the record date. Generally, to be eligible for bonus shares, an investor should buy the stocks of a company at least one day or two days before the ex-date.
On BSE, REC is listed under the 'A' group with a settlement type of 'T+2'.
Under the settlement option 'T+2', the shares you bought will get credited to your Demat account after two days.
REC shares closed at ₹137.10 apiece up by 1.22% on BSE last week on Friday. The company's market cap is around ₹27,076.13 crore.