Shareholders are the real possessors since they invests their plutocrat in the shares, hence they expectdividend. The dividend is a share of separable gains which the governing body decided to distribute. Since the dividend distribution isn't obligatory the management may decide about the how important of separable gains every time distributed as tip and retained.However, the company need to face the dissatisfaction from the shareholders, If no dividend paid or paid the lower quantum during the times of gains. For dividend payments, company has to expend it’s liquid sources. The indispensable action available is not to make the dividend payment and getting the shareholders satisfaction is perk issue by staking the accumulated gain known as stock dividendie., issue of free shares rather of paying tip in cash. This process is also known as perk issue which requires the company has to follow the legal procedures, the stock tip also has it’s effect on paid up capital. To unfold these legal procedures, the impact of perk issue on share capital and also it’s graces and faults is the idea of this composition.