LIC Board Approves 1:1 Bonus Share Issue; Shareholders to Get Equal Free Shares

In a significant move aimed at rewarding investors, state-owned insurance giant Life Insurance Corporation of India (LIC) has approved a 1:1 bonus share issue, offering shareholders one additional share for every share they currently hold.

The decision was taken at a board meeting held on Monday and disclosed through a regulatory filing.

What the 1:1 Bonus Means

Under the approved proposal, shareholders will receive one fully paid-up equity share of ₹10 for each existing ₹10 share held as on the yet-to-be-announced record date.

In simple terms:

• If an investor holds 10 LIC shares, they will receive 10 additional shares free of cost.

Financial Details of the Bonus Issue

LIC stated that the bonus shares will be issued by capitalising approximately ₹6,325 crore from its reserves and surplus as of the end of Q3 FY26.

The company has also confirmed that:

• The bonus issue process will be completed within two months from the date of board approval.
• The record date for determining eligible shareholders will be announced shortly.

Why Companies Issue Bonus Shares

Bonus issues are typically undertaken to:

• Increase stock liquidity in the market
• Make shares more affordable for retail investors
• Signal confidence in financial strength and future growth

For LIC, this move also comes as a positive signal to investors who had expressed concerns after its discounted listing post IPO in 2022.

Government Stake and IPO Background

The Government of India currently holds a dominant 96.5% stake in LIC. The remaining 3.5% was divested through its IPO in May 2022, priced in the band of ₹902–₹949 per share.

What It Means for Investors

While a bonus issue does not increase the overall value of holdings immediately, it:

• Enhances market participation
• Improves trading volumes
• Potentially boosts investor sentiment

Over time, improved liquidity and sentiment can positively influence stock performance.