{"id":5660,"date":"2024-06-07T09:27:00","date_gmt":"2024-06-07T09:27:00","guid":{"rendered":"https:\/\/wp-api.pocketful.in\/blog\/?p=5660"},"modified":"2025-02-18T05:50:26","modified_gmt":"2025-02-18T05:50:26","slug":"bonus-issue","status":"publish","type":"post","link":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/","title":{"rendered":"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained"},"content":{"rendered":"\n<p>Companies have multiple ways to reward their shareholders and manage their capital structure. One such method is through a bonus issue, a term that often leaves investors interested.<\/p>\n\n\n\n<p>This blog delves deeper into what a bonus issue is, its purpose, and its implications for shareholders.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Meaning_Of_Bonus_Issue\" title=\"Meaning Of Bonus Issue\">Meaning Of Bonus Issue<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#How_Does_a_Bonus_Issue_Work\" title=\"How Does a Bonus Issue Work?\">How Does a Bonus Issue Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Purpose_of_Bonus_Issues\" title=\"Purpose of Bonus Issues\">Purpose of Bonus Issues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Process_of_Issuing_Bonus_Shares\" title=\"Process of Issuing Bonus Shares\">Process of Issuing Bonus Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Implications_for_Shareholders\" title=\"Implications for Shareholders\">Implications for Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Key_Dates\" title=\"Key Dates\">Key Dates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Impact_on_the_Stock_Market\" title=\"Impact on the Stock Market\">Impact on the Stock Market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Indian_Case_Studies_of_Bonus_Issues\" title=\"Indian Case Studies of Bonus Issues\">Indian Case Studies of Bonus Issues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#How_can_I_track_Bonus_Issues\" title=\"How can I track Bonus Issues?\">How can I track Bonus Issues?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#Frequently_Asked_Questions_FAQs\" title=\"Frequently Asked Questions (FAQs)\">Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"h-meaning-of-bonus-issue\"><span class=\"ez-toc-section\" id=\"Meaning_Of_Bonus_Issue\"><\/span>Meaning Of Bonus Issue<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A bonus issue is a <a href=\"https:\/\/www.pocketful.in\/tools\/corporate-actions\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>corporate action<\/strong><\/a> where a company issues additional shares to its existing shareholders free of cost, based on the number of shares they already hold. Essentially, it is a way for a company to distribute accumulated profits or reserves without paying out cash.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-a-bonus-issue-work\"><span class=\"ez-toc-section\" id=\"How_Does_a_Bonus_Issue_Work\"><\/span>How Does a Bonus Issue Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When a company decides to issue bonus shares, it converts part of its reserves into equity capital. For instance, if a company declares a bonus issue of 1:2, it means that for every two shares a shareholder owns, they will receive one additional share for free. This does not change the overall value of the investment but increases the number of shares held by the investor.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-purpose-of-bonus-issues\"><span class=\"ez-toc-section\" id=\"Purpose_of_Bonus_Issues\"><\/span>Purpose of Bonus Issues<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki.png\" alt=\"Purpose of Bonus Issues\" class=\"wp-image-5706\" style=\"aspect-ratio:1.3333333333333333;object-fit:cover;width:303px;height:auto\" srcset=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki-1024x1024.png 1024w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki-300x300.png 300w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki-150x150.png 150w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki-768x768.png 768w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki-1536x1536.png 1536w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki-96x96.png 96w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-rafiki.png 2000w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rewarding Shareholders<\/strong>: One of the primary reasons for issuing bonus shares is to reward shareholders without parting with cash. By providing them with additional shares, companies aim to acknowledge the loyalty and trust of their investors.&nbsp;<\/li>\n\n\n\n<li><strong>Improving Stock Liquidity<\/strong>: A bonus issue can improve the liquidity of a company&#8217;s shares. By increasing the number of shares in circulation, trading activity is expected to rise, which can increase the liquidity of the stock.<\/li>\n\n\n\n<li><strong>Making Shares Affordable<\/strong>: If the share price of a share is high, issuing bonus shares can reduce the price per share, making it more affordable for small-scale investors. This action thus attracts a wider base of shareholders.<\/li>\n\n\n\n<li><strong>Signaling Strong Financial Health<\/strong>: A bonus issue often signals that a company is confident about its future prospects and has reserves. This can boost investor confidence and enhance the company&#8217;s reputation in the market.<\/li>\n<\/ul>\n\n\n\n<p><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/options\/\">What is Options Trading?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-process-of-issuing-bonus-shares\"><span class=\"ez-toc-section\" id=\"Process_of_Issuing_Bonus_Shares\"><\/span>Process of Issuing Bonus Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro.png\" alt=\"Process of Issuing Bonus Shares\" class=\"wp-image-5707\" style=\"width:278px;height:auto\" srcset=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro-1024x1024.png 1024w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro-300x300.png 300w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro-150x150.png 150w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro-768x768.png 768w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro-1536x1536.png 1536w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro-96x96.png 96w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Completed-steps-bro.png 2000w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>The process of issuing bonus shares involves several steps and requires compliance with regulatory guidelines set by the Securities and Exchange Board of India (SEBI).<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Board Approval<\/strong>: The process begins with the company\u2019s board of directors passing a resolution to issue bonus shares. This resolution determines the ratio of the bonus issue and the record date, which is the date on which shareholders eligible to receive the bonus shares are determined.<\/li>\n\n\n\n<li><strong>Shareholder Approval<\/strong>: Following board approval, the proposal must be approved by the shareholders in a general meeting. This step ensures that the interests of all shareholders are considered and that they have a say in the decision.<\/li>\n\n\n\n<li><strong>Regulatory Filings<\/strong>: Then, the company files the necessary documents with SEBI and the stock exchanges. The documents include providing details of the bonus issue and ensuring compliance with all regulatory requirements.<\/li>\n\n\n\n<li><strong>Distribution of Bonus Shares<\/strong>: Once all approvals are received, the company distributes the bonus shares to eligible shareholders. The shares are credited to the shareholders&#8217; demat accounts, and they are informed about the credit through their respective depository participants.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-implications-for-shareholders\"><span class=\"ez-toc-section\" id=\"Implications_for_Shareholders\"><\/span>Implications for Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>No Financial Gain:<\/strong> One important aspect of a bonus issue is that it does not provide any direct financial gain to shareholders. Even though they receive additional shares, the overall value of their holdings remains the same because the market adjusts the share price downward to reflect the increased number of shares.<\/li>\n\n\n\n<li><strong>Tax Implications:<\/strong> In India, bonus shares are not taxable at the time of issue. However, when the shareholder sells these shares, capital gains tax is applicable like any other security sale.&nbsp;<\/li>\n\n\n\n<li><strong>No Change in Shareholding:<\/strong> Though a bonus issue results in an increased number of shares, the shareholding pattern remains consistent because every shareholder receives the bonus share.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-key-dates\"><span class=\"ez-toc-section\" id=\"Key_Dates\"><\/span>Key Dates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico.png\" alt=\"Key Dates of bonus Shares\" class=\"wp-image-5708\" style=\"width:287px;height:auto\" srcset=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico-1024x1024.png 1024w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico-300x300.png 300w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico-150x150.png 150w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico-768x768.png 768w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico-1536x1536.png 1536w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico-96x96.png 96w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Date-picker-amico.png 2000w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><strong>Announcement Date<\/strong> \u2013 It is the date on which the Board announces the Bonus issue. It is also known as the Declaration Date.<\/p>\n\n\n\n<p><strong>Record Date<\/strong> \u2013 It is the date on which a company that is going to give bonus shares decides the eligible shareholders to receive the bonus shares.<\/p>\n\n\n\n<p><strong>Ex-Date<\/strong> \u2013 This is the date by which you need to purchase the shares to be eligible to receive the bonus shares. Generally, it is two days prior to the record date as settlement takes two days in most of the markets.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-impact-on-the-stock-market\"><span class=\"ez-toc-section\" id=\"Impact_on_the_Stock_Market\"><\/span>Impact on the Stock Market<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana.png\" alt=\"Impact on the Stock Market\" class=\"wp-image-5709\" style=\"aspect-ratio:1.3333333333333333;object-fit:cover;width:415px;height:auto\" srcset=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana-1024x1024.png 1024w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana-300x300.png 300w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana-150x150.png 150w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana-768x768.png 768w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana-1536x1536.png 1536w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana-96x96.png 96w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Data-analysis-pana.png 2000w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Share Price Adjustment:<\/strong> Following a bonus issue, the share price adjusts to reflect the increased number of shares in circulation. For example, if a company issues bonus shares in a 1:1 ratio, the share price is likely to halve because the number of shares has doubled.<\/li>\n\n\n\n<li><strong>Market Perception:<\/strong> A bonus issue is often perceived positively by the market as it indicates the company&#8217;s robust financial health. It can lead to increased investor interest and potentially drive up the share price in the long run, despite the initial adjustment.<\/li>\n\n\n\n<li><strong>Liquidity and Trading Volume:<\/strong> The increased number of shares can lead to higher trading volumes, enhancing liquidity. This can make the stock more attractive to both retail and institutional investors, contributing to a more dynamic market environment.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-indian-case-studies-of-bonus-issues\"><span class=\"ez-toc-section\" id=\"Indian_Case_Studies_of_Bonus_Issues\"><\/span>Indian Case Studies of Bonus Issues<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Reliance Industries Limited (RIL):<\/strong><\/p>\n\n\n\n<p>Reliance Industries Limited is one of the most renowned companies in India. In 2017, RIL announced a bonus issue in the ratio of 1:1. This move was well-received by the market players, leading to a surge in trading volumes and positive investor sentiment.&nbsp;<\/p>\n\n\n\n<p><strong>Tata Consultancy Services (TCS):<\/strong><\/p>\n\n\n\n<p>TCS is one of the biggest tech companies in India. In 2018, Tata Consultancy Services (TCS) declared a bonus issue at a 1:1 ratio. This was the result of one of the company&#8217;s efforts to reward its shareholders and increase the affordability of its shares. The bonus issue was perceived positively and contributed to a boost in the company&#8217;s market capitalization.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-can-i-track-bonus-issues\"><span class=\"ez-toc-section\" id=\"How_can_I_track_Bonus_Issues\"><\/span>How can I track Bonus Issues?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki.png\" alt=\"How can I track Bonus Issues?\" class=\"wp-image-5710\" style=\"width:298px;height:auto\" srcset=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki-1024x1024.png 1024w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki-300x300.png 300w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki-150x150.png 150w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki-768x768.png 768w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki-1536x1536.png 1536w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki-96x96.png 96w, https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/Location-tracking-rafiki.png 2000w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Generally, listed companies publish all the corporate announcements at stock exchanges first, i.e., NSE and BSE in India. However, it will be cumbersome for you to monitor updates from each company individually.<\/p>\n\n\n\n<p>To simplify this process, we&#8217;ve created a dedicated corporate action page where you can effortlessly track all the latest corporate announcements, including but not limited to dividends, rights, splits, and bonus issues.<\/p>\n\n\n\n<p>You can access the <a href=\"https:\/\/www.pocketful.in\/tools\/corporate-actions\"><em>corporate actions page<\/em><\/a> to get the detailed list.<\/p>\n\n\n\n<p>But that\u2019s not all. In addition to our corporate actions page, we recently launched our new WhatsApp service. Now, you can effortlessly stay informed about all corporate actions, including dividends, bonuses, splits, and more, delivered straight to your phone every morning by 9 A.M. for just INR 11!<\/p>\n\n\n\n<p>Sign up now and <a href=\"https:\/\/pulse.pocketful.in\/corporate-actions\"><em>never miss any corporate announcement<\/em><\/a>.<\/p>\n\n\n\n<p><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/stock-splits\/\">What are Stock Splits? Meaning, Reason, Types, and Impact Explained<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Bonus issues are a significant corporate action that reflects a company\u2019s confidence in its financial health and future prospects. However, for shareholders, there is no immediate financial gain. But the long-term benefits of this action can be substantial if the company continues to perform well.&nbsp;<\/p>\n\n\n\n<p>Bonus issues also enhance stock liquidity and make shares more affordable. However, it is crucial for investors to understand the implications of bonus issues and consider them while making an investment decision.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions-faqs\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3 class=\"\">Why do companies issue bonus shares?<\/h3><p class=\"saswp-faq-answer-text\">Companies issue bonus shares to reward shareholders, improve stock liquidity, and make shares more affordable. It\u2019s a way to convert accumulated reserves into equity capital while maintaining investor confidence.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How does a bonus issue affect the share price?<\/h3><p class=\"saswp-faq-answer-text\">After a bonus issue, the share price adjusts downward to reflect the increased number of shares in circulation. For instance, if a company issues bonus shares in a 1:1 ratio, the share price is likely to halve as the number of shares has doubled, keeping the overall value of the market capitalization the same.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Are bonus shares taxable in India?<\/h3><p class=\"saswp-faq-answer-text\">Bonus shares are not taxable at the time of issue. However, when shareholders sell these shares, capital gains tax is applicable.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How does a bonus issue impact a company\u2019s reserves?<\/h3><p class=\"saswp-faq-answer-text\">A bonus issue reduces a company\u2019s reserves as a part of the reserves is converted into equity capital. This process does not affect the company\u2019s cash balance but modifies the structure of its equity and reserves on the balance sheet.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Can a bonus issue improve a company&#8217;s market perception?<\/h3><p class=\"saswp-faq-answer-text\">A bonus issue can signal that a company is financially strong. This can enhance investor confidence and increase market interest in the stock.<\/p><\/ul><\/div>","protected":false},"excerpt":{"rendered":"<p>Companies have multiple ways to reward their shareholders and manage their capital structure. One such method is through a bonus issue, a term that often leaves investors interested. This blog delves deeper into what a bonus issue is, its purpose, and its implications for shareholders. Meaning Of Bonus Issue A bonus issue is a corporate [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":5663,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"is_paper_insight":false,"paper_insight_image":0,"paper_insight_pdf":0,"paper_insight_ppt":0,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-5660","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"acf":{"freelancer":"Not Added"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.13 (Yoast SEO v21.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained - Pocketful<\/title>\n<meta name=\"description\" content=\"Interested in learning about Bonus Issues? Read the blog to learn its meaning, working, dates, and implications for shareholders.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained\" \/>\n<meta property=\"og:description\" content=\"Interested in learning about Bonus Issues? Read the blog to learn its meaning, working, dates, and implications for shareholders.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/\" \/>\n<meta property=\"og:site_name\" content=\"Pocketful\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Pocketful.HQ\/\" \/>\n<meta property=\"article:published_time\" content=\"2024-06-07T09:27:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-18T05:50:26+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/wp-api.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/bonus-share-banner-.png\" \/>\n\t<meta property=\"og:image:width\" content=\"4678\" \/>\n\t<meta property=\"og:image:height\" content=\"3375\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Pranit Mathur\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Pocketful_HQ\" \/>\n<meta name=\"twitter:site\" content=\"@Pocketful_HQ\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Pranit Mathur\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained - Pocketful","description":"Interested in learning about Bonus Issues? Read the blog to learn its meaning, working, dates, and implications for shareholders.","robots":{"index":"noindex","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"og_locale":"en_US","og_type":"article","og_title":"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained","og_description":"Interested in learning about Bonus Issues? Read the blog to learn its meaning, working, dates, and implications for shareholders.","og_url":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/","og_site_name":"Pocketful","article_publisher":"https:\/\/www.facebook.com\/Pocketful.HQ\/","article_published_time":"2024-06-07T09:27:00+00:00","article_modified_time":"2025-02-18T05:50:26+00:00","og_image":[{"width":4678,"height":3375,"url":"https:\/\/wp-api.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/bonus-share-banner-.png","type":"image\/png"}],"author":"Pranit Mathur","twitter_card":"summary_large_image","twitter_creator":"@Pocketful_HQ","twitter_site":"@Pocketful_HQ","twitter_misc":{"Written by":"Pranit Mathur","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#article","isPartOf":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/"},"author":{"name":"Pranit Mathur","@id":"https:\/\/wp-api.pocketful.in\/blog\/#\/schema\/person\/eae423acaf12d8e14ddef6f5508d4ceb"},"headline":"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained","datePublished":"2024-06-07T09:27:00+00:00","dateModified":"2025-02-18T05:50:26+00:00","mainEntityOfPage":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/"},"wordCount":1210,"publisher":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/#organization"},"articleSection":["Investing"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/","url":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/","name":"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained - Pocketful","isPartOf":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/#website"},"datePublished":"2024-06-07T09:27:00+00:00","dateModified":"2025-02-18T05:50:26+00:00","description":"Interested in learning about Bonus Issues? Read the blog to learn its meaning, working, dates, and implications for shareholders.","breadcrumb":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/wp-api.pocketful.in\/blog\/bonus-issue\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Blog Home","item":"https:\/\/wp-api.pocketful.in\/blog\/"},{"@type":"ListItem","position":2,"name":"What is a Bonus Issue? Meaning, Process, Key Dates, and Impact Explained"}]},{"@type":"WebSite","@id":"https:\/\/wp-api.pocketful.in\/blog\/#website","url":"https:\/\/wp-api.pocketful.in\/blog\/","name":"Pocketful blog","description":"Learn Stock market trading, investing &amp; more","publisher":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/wp-api.pocketful.in\/blog\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/wp-api.pocketful.in\/blog\/#organization","name":"Pocketful","alternateName":"Pocketful Broker","url":"https:\/\/wp-api.pocketful.in\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/wp-api.pocketful.in\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2023\/08\/Logo_Final-01-1-3-1.png","contentUrl":"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2023\/08\/Logo_Final-01-1-3-1.png","width":150,"height":26,"caption":"Pocketful"},"image":{"@id":"https:\/\/wp-api.pocketful.in\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Pocketful.HQ\/","https:\/\/twitter.com\/Pocketful_HQ","https:\/\/www.linkedin.com\/company\/pocketfulofprofits\/","https:\/\/www.instagram.com\/pocketful.official\/"]},{"@type":"Person","@id":"https:\/\/wp-api.pocketful.in\/blog\/#\/schema\/person\/eae423acaf12d8e14ddef6f5508d4ceb","name":"Pranit Mathur","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/wp-api.pocketful.in\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/e813f91983732e867d24af7a8fc6fc7ad512653879c1a937e72453158bd07bde?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/e813f91983732e867d24af7a8fc6fc7ad512653879c1a937e72453158bd07bde?s=96&d=mm&r=g","caption":"Pranit Mathur"}}]}},"associated_menu_id":null,"article_history_entries":[{"type":"Edit","author":{"id":7,"name":"Pocketful Team","url":"pocketful"},"content":"Post created","date":"2024-06-07 09:27:00","id":"ah_67179826654af7.42434386"},{"type":"Links","author":{"id":11,"name":"Nisha","url":"nisha"},"content":"Add internal links","date":"2025-02-18 05:50:26","id":"ah_67b41fa2775933.53611277"}],"is_paper_insight":false,"image_url_featured":"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2024\/06\/bonus-share-banner-.png","_links":{"self":[{"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/posts\/5660","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/comments?post=5660"}],"version-history":[{"count":0,"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/posts\/5660\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/media\/5663"}],"wp:attachment":[{"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/media?parent=5660"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/categories?post=5660"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wp-api.pocketful.in\/blog\/wp-json\/wp\/v2\/tags?post=5660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}