LIC board gives nod to 1:1 bonus issue—What investors need to know

Public sector life insurance company LIC's board on Monday gave the nod to a proposed bonus issuance in the ratio of 1:1. A 1:1 bonus -- read as 'one for one' in market parlance -- means that eligible shareholders will receive one equity share for each equity share held in the company. This marks the state-run life insurance behemoth's first bonus issuance since the listing of its shares in 2022.

In a regulatory filing made post-market hours on Monday, the company said that eligible investors will receive one fully-paid up equity share of the face value of Rs 10 for every one fully paid-up equity share on the record date.

However, it is not the first time the life insurance PSU has decided to reward its shareholders.

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It has announced several dividend in the four-year period.

Earlier on Monday, LIC shares ended 1.3 per cent higher at Rs 809 apiece on NSE, outperforming a Mumbai-market where benchmarks fell nearly one per cent at the end of a volatile day.

LIC Bonus Shares | What investors must know

How much will PSU life insurer pay as bonus?

The company will be capitalising shares worth up to Rs 6,325 crore through the bonus shares.

This is subject to shareholders' nod.

This amounts to 632.5 crore shares of the face value of Rs 10 each.

Authorised capital

Out of the total authorised capital of Rs 25,000 crore, the company's paid-up capital will increase from Rs 6,325 crore to Rs 12,650 crore post-bonus, according to the filing.

When will LIC bonus shares be paid?

The bonus shares will be credited to the demat accounts of eligible shareholders on or before June 12, the filing noted.

What are bonus shares?

The issuance of bonus shares -- a type of corporate action, just like dividends -- is a tool that enables listed companies to reward their shareholders.

What does the bonus issuance ratio tell investors?

A bonus issuance ratio -- in this case, 1:1 -- tells the ratio of the quantity of bonus shares allotted to existing shareholders.

For instance, a 1:1 bonus means that a shareholder holding even one unit of the company's stock by a qualifying date will be eligible to receive the one bonus equity share.

How many dividends has LIC paid since its listing in 2022?

Here's a brief history of the state-run insurance provider's dividend announcements since its entry in the listed space: