Bonus Share

A bonus share, also known as a scrip dividend or a capitalization issue, is an additional share issued to existing shareholders of a company without any additional cost. Bonus shares are issued by a company to reward its shareholders by increasing the total number of shares outstanding, without diluting the value of each share.

 

The dates associated with bonus shares are as follows:

 

Record Date: The record date is the date on which a company determines the list of shareholders who are eligible to receive the bonus shares. Shareholders who own shares on or before this date are entitled to receive the bonus shares.

 

Ex-Bonus Date: The ex-bonus date is the date on which the shares of the company start trading without the entitlement of the bonus shares. If a shareholder purchases the shares on or after this date, they will not be eligible to receive the bonus shares.

 

Payment Date: The payment date is the date on which the company issues the bonus shares to eligible shareholders. This date may be several weeks or months after the record date.

 

It's important to note that the value of the company remains the same even after the issuance of bonus shares, as the total market capitalization of the company remains unchanged. However, the bonus shares increase the number of shares outstanding, which may lead to a decrease in the earnings per share (EPS) and the price per share (PPS) in the short term.