Companies can create new shares if the company needs more capital. The declaration of more shares is decided in the board meetings of the firms. For example, A company’s value is 100 crores and in order to expand it needs 200 crores. In other scenarios the companies can issue bonus shares to the shareholders if the company trends upward in profits. For example, Ashok Mehta company gains profits of worth 50 crores, then the company issues bonus shares in ratios like 2:1,5:2 etc.
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