What Are  Bonus Shares?

Orange Lightning

Bonus shares are free to existing shareholders based on their holdings, reflecting a company's strong finances and distributing profits without cash payouts, here are some things to know.

1

Free Additional Shares

Bonus shares are extra shares a company gives to its existing shareholders at no additional cost.

2

Proportionate Distribution

They are distributed based on the number of shares a shareholder already owns.

3

Profits Not Dividends

Companies issue bonus shares when they have good profits but choose not to distribute them as dividends.

4

Increased Share Count

The total number of outstanding shares in the company increases.

5

No Change in Market Value

The overall market value of the company typically remains unchanged.

6

Attracting Investors

Bonus shares can make a stock more attractive to retail investors by lowering the share price.

7

Financial Strength Signal

Issuing bonus shares can be seen as a sign of a company's financial health.