What Is a Bonus Issue of Shares?
A bonus issue (also called a scrip or capitalisation issue) is when a company gives its existing shareholders additional shares free of charge, in proportion to what they already hold. It rewards shareholders without paying out cash.
How it works
In a 1:1 bonus, you receive one new share for every share you own — doubling your share count. The company funds this by converting its accumulated reserves into share capital; no money changes hands. As with a split, the share price adjusts down proportionally, so the total value of your holding is unchanged on the day.
Bonus vs split vs dividend
- Bonus issue — free extra shares funded from reserves; face value per share stays the same.
- Stock split — each share is divided into more; face value per share falls.
- Dividend — a cash payout from profits; share count unchanged.
Bonus and split both leave total value unchanged while increasing the share count; the accounting and the face-value treatment differ.
Why companies issue bonus shares
Like a split, a bonus issue lowers the per-share price to improve liquidity and accessibility, and signals that the company has strong reserves. It's often read positively by the market.
In the data
A bonus issue is a corporate action and, like a split, requires price adjustment to keep a continuous chart. See corporate actions explained and adjusted close.