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LSDefine
Simple English definitions for legal terms
bonus share
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A quick definition of bonus share:
Bonus share is a type of stock that a company gives to its shareholders for free, as a reward for owning their shares. It is like getting a gift from the company. Bonus shares do not cost anything to the shareholder, but they increase the number of shares they own in the company. This means that if the company does well, the shareholder will get more money when they sell their shares.A more thorough explanation:
A bonus share is a type of stock that is issued by a company to its shareholders for free, as an incentive to buy more of the company's stock. It is also known as bonus stock.
For example, if a company declares a bonus share issue of 1:1, it means that for every share held by a shareholder, they will receive an additional share for free. So, if a shareholder owns 100 shares, they will receive an additional 100 shares for free.
This is a way for companies to reward their shareholders without having to pay out cash dividends. It also increases the number of shares outstanding, which can make the stock more liquid and attractive to investors.