When does company issue Bonus shares?



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When does company issue Bonus shares?

2 Answer(s)


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Company issue bonus share when they are running in profits. Bonus share is extra shares given to the current shareholders of the company without any cost, but based upon the number of shares that a shareholder owns. These are company's accumulated earnings which are not given in the form of dividends, but are converted as free shares.

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Bonus shares are usually issued to improve liquidity in a stock, and give a feeling to the investor that the stock price has become more affordable. This helps in improving the sentiment for the stock, especially among retail investors, as he can now own more number of shares for the amount of one share earlier.