- Does not affect shareholders’ net assets
- Increases the number of outstanding shares
- Helps improve stock liquidity on the exchange
What Are Bonus Shares and How to Understand Them Correctly in the Vietnamese Market
What are bonus shares? This is a familiar concept but easily confusing for many new investors. This article will help you correctly understand the nature, current regulations, and practical application strategies in Vietnam.
What is the Concept of Bonus Shares?
What are bonus shares? This is a form where a company distributes additional shares from internal capital sources to existing shareholders without collecting additional money. The issuance of bonus shares usually comes from undistributed after-tax profits or capital surplus funds.
Distinguishing Between Bonus Shares and Stock Dividends
Many new investors often ask: what are share bonuses and how do they differ from stock dividends? Although the distribution forms are quite similar, the accounting and tax nature are completely different.
| Criteria | Bonus Shares | Stock Dividends |
|---|---|---|
| Capital Source | Capital surplus, undistributed profits | After-tax profits |
| Personal income taxation | Not taxed | May be taxed |
| Financial recognition | Increase in charter capital | Recognition of dividend expenses |
What is Issuing Bonus Shares and When Should It Be Done?
What is issuing bonus shares? This is the process of a business issuing additional shares internally to increase charter capital without requiring new cash flow. This is usually done when the company wants to retain profits while still creating value for shareholders.
Real Examples in Vietnam
- MWG issued bonus shares at a 1:1 ratio in 2022
- HPG issued 35% bonus shares in 2021
- VNM regularly distributes bonus shares to enhance market price attractiveness
Regulations on Bonus Shares and Disclosure Obligations
According to regulations on bonus shares in the 2019 Securities Law and related circulars, businesses must fully disclose information. This includes:
- Resolution of the General Meeting of Shareholders approving the issuance
- Announcement of issuance ratio, record date, and receipt time
- Ensuring updated charter capital with the business registration authority
Impact of Bonus Shares on Stock Price
When issuing bonus shares, the market price of the stock will adjust downward according to the distribution ratio. This is completely normal and does not reflect negatively. The total asset value of shareholders remains unchanged.
| Indicator | Before Distribution (VND) | After 1:1 Distribution (VND) |
|---|---|---|
| Stock price | 100,000 | 50,000 |
| Number of shares | 1,000 | 2,000 |
| Total value | 100 million | 100 million |
Advantages and Disadvantages of Receiving Bonus Shares
Advantages
- No need for additional capital to increase the number of shares
- Increases liquidity and attracts new money flow
- Not subject to personal income tax
Disadvantages
- Does not increase the actual value of assets
- Price adjustment may confuse inexperienced investors
- Can lead to dilution if the business does not grow proportionally
How to Track Bonus Shares Through Technical Analysis Platforms
Platforms like Pocket Option provide tools to track bonus share issuance schedules, adjust prices on technical charts, and support investors in testing strategies before actual trading.
| Tool | Function |
|---|---|
| Issuance calendar | Notifies record date and ratio |
| Technical chart after distribution | Adjusted price updated immediately |
| Demo account | Test investment models |
Conclusion
What are bonus shares? They are an effective financial tool helping businesses increase capital internally and create additional value for shareholders. What is issuing bonus shares needs to be understood correctly to avoid misunderstanding about stock price decreases. When clearly understanding regulations on bonus shares and using appropriate technical tools, investors can take advantage of opportunities from bonus distributions.
FAQ
What are bonus shares and how do they differ from stock dividends?
Bonus shares are distributed from internal capital sources and are not taxed as income. Stock dividends are distributed from after-tax profits and may be subject to taxation.
What is issuing bonus shares and who receives them?
It's when a company distributes additional shares to existing shareholders. Those who hold shares before the record date will receive them.
Do I need to pay taxes when receiving bonus shares?
Currently no. But you should monitor new regulations from the Ministry of Finance.
Do regulations on bonus shares change over time?
Yes. Investors need to follow the Securities Law and the latest guidance circulars.
How can I effectively track bonus share issuance schedules?
Use technical analysis tools, market monitoring accounts, and information disclosure calendars from HOSE/HNX.