Bonus issue
Also called: bonus shares
Free extra shares given to existing shareholders in a fixed ratio, paid for from the company's reserves rather than in cash.
A bonus issue moves an amount from reserves into share capital. Shareholders receive more shares, the share price adjusts down in proportion, and the value of their holding is unchanged. Unlike a split, face value stays the same.
For tax, the holding period of bonus shares runs from the date they are allotted.
Example
In a 1:1 bonus, 60 shares at ₹840 become 120 shares at about ₹420.
Learn more in these lessons
- Dividends, splits, bonus shares and other corporate actionsWhat happens to my shares in a split, bonus issue or rights issue?
- Adjusted and unadjusted pricesWhy are the old prices on a chart sometimes different from the prices that traded?
Related terms
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