The audit and risk committee of Railnet Corporation Limited (RCL), were in a meeting with the auditors discussing the draft financial statements. Jaya Daji, an independent director, puts forward a proposal that RCL uses its Capital Gains Reserve (which is tax free to shareholders) to make a 1 for 1 bonus issue to shareholders. The chair of the audit and risk committee does not agree and states "As a bonus issue results in no change to equity, I cannot see any benefits to the company or to the shareholders." The committee chair turns to you (an independent director) and ask "what do you think?".

Required 

Discuss the statement made by the director.