If a bonus or rights issue is made at the prevailing market price of the shares then there is no bonus element in the issue.

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If a bonus or rights issue is made at the prevailing market price of the shares, then there is no bonus element as the issue is made at market value. A bonus issue involves the distribution of additional shares to existing shareholders free of cost, which would increase the total number of shares outstanding without changing the value of the company. However, if the bonus issue is made at a price below the prevailing market price, it would be considered a bonus element. Similarly, a rights issue allows existing shareholders to purchase additional shares at a discounted price, which could be considered a bonus element if the discount is significant.

If a Bonus or Rights Issue Is Made at the Prevailing