Understanding बोनस शेयर: A Complete Guide

Investing in the stock market often feels like learning a new language. You encounter terms like dividends, splits, and rights issues, which can be overwhelming for beginners. One term that frequently generates excitement among investors is the concept of a बोनस शेयर. While the term itself sounds like free money, the mechanics behind it are a bit more nuanced. If you’ve ever looked at your portfolio and suddenly saw more shares than you bought, you likely experienced this corporate action firsthand.

In this guide, we will break down exactly what bonus shares are, why companies issue them, and whether they truly add value to your investment portfolio. We will move beyond the textbook definitions to look at real-world implications and how smart investors leverage these events.

What Exactly is a Bonus Share?

At its core, a bonus share is an additional share given to existing shareholders without any extra cost. These are issued by a company based on the number of shares a shareholder already owns. Think of it as a loyalty reward. If a company declares a 1:1 bonus issue, it means for every single share you hold, you get one additional share for free.

However, it is crucial to understand that while the number of shares increases, the overall value of your investment remains theoretically the same immediately after the issue. It is similar to slicing a pizza. Whether you cut a pizza into four slices or eight slices, the total amount of pizza remains the same. The "pizza" is the market capitalization of the company, and the "slices" are the individual shares.

When a company issues a बोनस शेयर, the share price usually adjusts downwards in proportion to the bonus ratio. If a stock was trading at $100 and a 1:1 bonus is issued, the price will likely adjust to somewhere around $50. So, why do investors get excited? The excitement comes from the signal it sends about the company's health and future liquidity.

Why Do Companies Issue Bonus Shares?

You might wonder, if the value doesn't instantly double, why do companies bother with the administrative hassle of issuing new shares? There are several strategic reasons behind this corporate action.

1. Increasing Liquidity

When a stock price becomes very high, it can become inaccessible to retail investors. A high-priced stock might deter smaller investors from buying in because they can't afford a single share or a meaningful lot. By issuing bonus shares, the price per share drops, making it more affordable for the general public. This increased participation leads to higher trading volume and better liquidity in the market.

2. Capitalizing Reserves

Companies accumulate profits over time, which sit in their reserves. Instead of distributing this cash as dividends, a company might choose to convert these reserves into share capital. This is essentially an accounting restructuring. It signals that the company is confident enough to lock in its capital for the long term rather than paying it out as cash.

3. Signaling Confidence

The announcement of a बोनस शेयर is often perceived as a sign of financial strength. It suggests that the company expects to be able to service a larger equity base in the future. Historically, companies that issue bonuses are viewed as growth-oriented and stable, which can boost investor sentiment.

The Tax Implications and Financial Impact

One of the most attractive aspects of receiving bonus shares is the tax treatment compared to dividends. When