A bonus issue is when a company gives existing shareholders additional shares free of cost, in proportion to the shares they already hold. The company converts part of its accumulated reserves into share capital. A "1:1 bonus" means one extra share for every share you own.
What a bonus issue is
Over the years, profitable companies build up reserves on their balance sheet. A bonus issue moves part of those reserves into share capital and distributes the new shares to shareholders. No cash leaves the company and no cash comes in. Shareholders own more shares, but the company's total value is unchanged, so the share price adjusts downward in proportion.
How it works in India
The board recommends the bonus, shareholders approve it where required, and the company announces a record date. Shareholders who hold shares on that date receive the bonus shares in their demat accounts. On the ex-bonus date, the share price adjusts. Bonus shares can be issued only from specific reserves, such as free reserves or the securities premium, not from revaluation reserves, and not in place of a dividend. Unlike a stock split, the face value stays the same.
A simple example
You hold 100 shares trading at ₹600, worth ₹60,000. The company announces a 1:1 bonus. After the record date you hold 200 shares, and the price adjusts to about ₹300. Your holding is still worth about ₹60,000. If the company later pays the same dividend per share as before, your total dividend doubles, because you now hold twice as many shares; but companies often adjust dividends after a bonus.
Why companies issue bonus shares
Companies issue bonuses to reward shareholders, increase the number of shares available for trading, make the share price more affordable, and signal confidence in their reserves and future earnings. A bonus also increases the company's share capital, which can matter for some regulatory and accounting purposes.
Bonus issue versus stock split
Both increase shares and lower the price per share. In a bonus, reserves become share capital and face value stays the same. In a split, the face value is divided and reserves are untouched. For shareholders, the immediate economic effect is similar; the accounting is different.
What happens to other numbers after a bonus
Because the share count rises, per-share figures such as earnings per share and book value per share fall in the same proportion as the price, so valuation ratios stay essentially the same. Exchanges and data providers adjust historical prices so that charts do not show a false crash on the ex-bonus date. Comparisons of a company's earnings per share across years are only meaningful when the figures are adjusted for bonus issues.
Examples on PositoAI: recent bonus issues, India
Bonus issues are common in India. The Actions page on PositoAI recorded 137 bonus issues in 2024, 141 in 2025 and 79 so far in 2026. Two recent ones show the range of ratios:
Mold-Tek Packaging went ex-bonus on 9 Oct 2026 with a 1:1 ratio: one new share for every share held, so a holder of 100 shares now has 200. Its sister company, Mold-Tek Technologies, issued a 1:1 bonus on the same day.
PH Capital went ex-bonus on 7 Oct 2026 with a much larger 10:1 ratio: ten new shares for every one held, so 100 shares became 1,100. In both cases the share price adjusted on the ex-date, and the value of a holding stayed about the same. (Figures as on 19 Oct 2026.)
Common misconceptions
"Bonus shares are free money." The price adjusts, so your total value stays about the same.
"My shares crashed on the ex-date." The fall reflects the bonus adjustment, offset by extra shares.
"Bonus means the company has lots of cash." Reserves are an accounting figure, not necessarily cash in the bank.
Frequently asked questions
Do I pay for bonus shares?
No, they are issued free.
Are bonus shares taxed when received?
Not on receipt; tax applies when you sell, based on the rules for capital gains.
What does 2:1 mean?
Two bonus shares for every one share held.
When do bonus shares appear in my account?
After the record date, usually within a few working days.
How to use this on PositoAI
Upcoming and recent bonus issues, with their ratios and dates, are listed on the Actions page. Each company's full bonus history is on its own Actions tab. Compare with our guide to stock splits. PosiStep 9 of PosiCourse, PositoAI's free stock market course, explains dividends, bonuses, splits and other corporate actions.
Summary
A bonus issue gives shareholders free extra shares by converting reserves into share capital. Face value stays the same, the share count rises and the price adjusts, so your holding's value is about unchanged. Shares go to holders on the record date. A bonus is similar in effect to a split but different in accounting.