What are bonus shares, and do they make your investment worth more?

What is a bonus share?

A company may issue additional shares to its existing shareholders without asking them to pay for those shares. The announced ratio tells you how many new shares you receive for the shares you already hold. A **1:1 bonus** gives one additional share for each existing share; **2:1** gives two additional shares for each existing share.

Does a bonus issue make you richer?

Not by itself. Suppose you own **10 shares at ₹100 each**, a holding worth **₹1,000**. After a 1:1 bonus, you would own **20 shares**. An indicative price adjustment would be **₹50 per share**, leaving the holding at **₹1,000** before normal market moves. Actual market prices can change for other reasons. SEBI’s investor material explains that the share count rises while the price per share is adjusted.

Who gets the new shares?

Eligibility is based on the company’s **record date**. Check the company announcement and stock exchange corporate-action notice for the ratio, record date and conditions before assuming you qualify. Bonus shares are credited through the depository system; SEBI has also set a process for trading the new shares from the second working day after the record date, subject to the circular’s conditions.

A bonus issue differs from a **stock split**: a bonus issue creates additional shares by capitalising reserves; a split divides existing shares into smaller units.