Posted in Finance, Accounting and Economics Terms, Total Reads: 1055
Definition: Bonus Share
Many a times the company may not pay out its accumulated earnings in the form of dividends to the shareholders, rather it may decide to offer them free shares based on a their existing number of shares. Basically when a company offers bonus shares, it provides each shareholder with a certain proportion of new shares based on their existing number of shares. However the total valuation of the company and the ratio of shares held by various shareholders remain same.