Know about Bonus & Right Share calculation after adjustment  

1. Bonus Share

Bonus shares are additional shares given to the current shareholders without any additional cost, based upon the number of shares that a shareholder owns.

The basic principle behind bonus shares is that the total number of shares increases with a constant ratio of number of shares held to the number of shares outstanding. For instance, if Investor A holds 1000 shares of a company and a company declares 20% bonus, that is for every 5 share, he gets 1 shares for free. That is total 200 shares for free and his total holding will increase to 1200 shares.

Here is the formula to calculate the adjusted price:

The market price in the formula is the Supposed to be last transaction price (LTP) of scrip just before the book closure date.

For example, if Nepal Investment Bank offers 20% bonus shares and the closing Market price of the share just before the book closure date is Rs 1090/kitta then the adjusted price after the bonus share will be:

After the bonus adjustment of 20% the number of shares held by shareholder increases, the value of the total shareholding remains the same as before the bonus issue.

2. Right Share

A rights issue is when a company issues its existing shareholders a right to buy additional shares in the company. The company will offer the shareholder a specific number of shares at a specific price. The company will also set a time limit for the shareholder to buy the shares. In context of Nepal right shares are generally issued at the par value of Rs 100.

Companies most commonly issue right shares to raise additional capital. A company may need extra capital to meet its current financial obligations, regulatory obligations or it may simply seek extra capital to fund expenditures designed to expand the company's business.

Here is the formula to calculate the adjusted price:

For example, Nepal Bangladesh Bank Limited had offered 80% right share at the subscription price of Rs 100/ kitta. Suppose The Last Trading Price (LTP) before the book closure was Rs 1200/kitta. Now the adjusted price after the right issue will be:

See Here For Online Calculation of  Right Share Adjustment  &  Calculation of Bonus Share Adjustment