What is Bonus Issue explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Bonus Issue is a term you will often come across in Company Law. This guide explains what Bonus Issue means, gives a simple example, and shows why it matters for taxpayers and businesses — in plain English.
What is Bonus Issue?
Bonus Issue is the issue of additional free shares to existing shareholders in proportion to their holdings, funded from the company's reserves.
In practical terms, Bonus Issue is a company-law concept — it governs how companies are formed, managed or how their decisions are made. Understanding it helps you read financial documents, stay compliant and make better decisions.
Bonus Issue explained with an example
A 1:1 bonus issue gives a shareholder one extra share for every share held. Examples like this make it easier to see how Bonus Issue works in real situations.
Why Bonus Issue matters
A bonus issue capitalises reserves and rewards shareholders without any cash outflow.
Bonus Issue at a glance
| Category | Company Law |
| Meaning | The issue of additional free shares to existing shareholders in proportion to their holdings, funded from the company's reserves. |
| Example | A 1:1 bonus issue gives a shareholder one extra share for every share held. |
Key points to remember
- Where it applies: Company Law
- In short: The issue of additional free shares to existing shareholders in proportion to their holdings, funded from the company's reserves.
- Why it matters: A bonus issue capitalises reserves and rewards shareholders without any cash outflow.
Related terms
If you are learning about Bonus Issue, these related terms are worth knowing too:
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