Bonus Issue: Investors often hear about bonus issues in the stock market, but it can be confusing. How can a company give you more shares without changing the value of your investment?

What is a bonus issue?

A bonus issue, also called a scrip issue, is when a company issues free additional shares to its existing shareholders. Instead of paying cash dividends, the company rewards shareholders by giving more shares in proportion to their current holdings.

For example, in a 1:2 bonus issue, if you own 100 shares, you will receive 50 extra shares for free.

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Why companies issue bonus shares?

- Companies usually announce bonus issues to:

- Reward Shareholders without spending cash.

- Make Shares More Affordable, as the price per share usually drops

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