Bonus Shares

Bonus shares are additional shares granted to existing shareholders at no extra cost, based on the quantity of shares they currently hold. These shares represent the company's retained earnings, which are allocated as free shares instead of being issued as dividends.

List of upcoming bonus shares in 2025

Here are the companies that have recently announced the issuance of bonus shares

What are bonus shares?

Bonus shares are additional shares issued by a company to its existing shareholders at no extra cost. The allotment is based on the number of shares a shareholder already owns. Companies typically issue bonus shares when they have surplus profits but decide to reinvest these profits into the business rather than distribute them as dividends.

The issuance of bonus shares requires approval from the company’s Board of Directors. Once approved, the bonus shares are credited directly to the shareholders’ accounts.

These shares are allocated in a specified ratio, such as 3:1, meaning shareholders receive 3 bonus shares for every 1 share they already hold. For instance, if you own 100 shares, you will receive an additional 300 bonus shares.

Types of bonus shares

Bonus shares can be classified into two main types: fully paid bonus shares and partially paid bonus shares.

1. Fully paid bonus share

Fully paid bonus shares are those shares for which the shareholder has already paid the entire amount due at the time of issuance. When a company distributes fully paid bonus shares, it does not require any further payment from its shareholders. These bonus shares are allotted to the existing shareholders in proportion to their existing holdings, without any additional financial burden on their part.

2. Partially paid bonus share

Partially paid bonus shares, on the other hand, are shares for which the shareholder has paid only a portion of the total amount due. In this scenario, the company issues bonus shares to its shareholders, but they are still required to make further payments to fully own these shares. The additional payment needed to fully pay for these bonus shares is usually communicated by the company along with the issuance.

Both types of bonus shares aim to enhance shareholder value and confidence by increasing the number of shares held by investors without diluting their ownership stake in the company. However, it's essential for investors to understand the terms and conditions associated with bonus share issues, particularly in the case of partially paid bonus shares, to avoid any misunderstandings or financial implications.

Bonus shares calculation

Bonus shares are allocated to existing shareholders based on their current holdings in the company. For instance, if a company announces a "one-for-two" bonus share issue, it implies that a shareholder will receive one additional share for every two shares they already own. As an example, if an investor possesses 1,000 shares, the bonus share allocation would be calculated as follows: 1,000 * ½ = 500 bonus shares.

Features of bonus shares

• Enhances the company's goodwill among shareholders and potential investors.
• The shareholding pattern remains unchanged as shares are distributed on a pro-rata basis.
• Share prices decrease significantly after a bonus issue, making them more accessible to retail investors.
• The increase in the number of outstanding shares improves stock liquidity.
• Bonus shares can only be issued after a minimum period of 12 months from the last issue.
• A maximum of two bonus issues is allowed within a five-year period.