LIC Board Approves Major 1:1 Bonus Share Issue
In a significant corporate development, the Life Insurance Corporation of India (LIC) announced on Monday that its board has approved a 1:1 bonus share issue. This strategic move is set to double the insurer's paid-up equity capital, with the primary objectives of improving stock liquidity and encouraging greater retail participation in the market.
Details of the Bonus Share Approval
The decision was made during a board meeting held on April 13, where the bonus issue was cleared subject to shareholder approval. A record date for the distribution will be announced at a later stage. This initiative is expected to enhance liquidity for LIC's shares, which currently trade at a discount compared to their initial issue price of Rs 949.
Financial Implications and Capital Structure
LIC's authorized equity share capital stands at Rs 25,000 crore, while its current paid-up equity share capital is Rs 6,325 crore. Following the implementation of the bonus issue, the paid-up capital will increase to Rs 12,650 crore. Importantly, this adjustment will not impact the company's financial strength, as it is a capital restructuring measure rather than a change in underlying assets.
Strategic Benefits and Government Plans
The bonus share issue is anticipated to support the government's efforts in selling shares through a follow-on public offer (FPO) by making the stock more accessible and liquid. This could attract a broader base of retail investors, aligning with LIC's goal of rewarding shareholders and improving market dynamics.
Financial Performance and Shareholder Rewards
As of December 31, 2025, LIC reported robust financials, with reserves and surplus amounting to Rs 1,46,441 crore. For the nine-month period ending on the same date, the insurer achieved a profit after tax of Rs 33,998 crore. LIC's Chief Executive and Managing Director, R Doraiswamy, highlighted the company's consistent dividend payments since its listing in May 2022, noting an increase in dividend per share from Rs 1.5 to Rs 12 over time.
Doraiswamy emphasized that LIC has been actively evaluating various mechanisms to reward its shareholders, with the bonus share issue being a key part of this strategy. This move underscores the insurer's commitment to enhancing shareholder value while maintaining its strong financial position in the insurance sector.
