What are bonus shares?

What are bonus shares?

Bonus shares are the additional shares that a company gives to its existing shareholders on the basis of shares owned by them. Bonus shares are issued to the shareholders without any additional cost.

Bonus shares are issued by a company when it is not able to pay a dividend to its shareholders due to a shortage of funds in spite of earning good profits for that quarter.

In such a situation, the company issues bonus shares to its existing shareholders instead of paying dividends.

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