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
Bonus shares are extra shares a company gives to its existing shareholders at no additional cost.
2
They are distributed based on the number of shares a shareholder already owns.
3
Companies issue bonus shares when they have good profits but choose not to distribute them as dividends.
4
The total number of outstanding shares in the company increases.
5
The overall market value of the company typically remains unchanged.
6
Bonus shares can make a stock more attractive to retail investors by lowering the share price.
7
Issuing bonus shares can be seen as a sign of a company's financial health.