Key points regarding Bonus Issue:

• Bonus issue is made out of its reserves built from genuine profits.
• Face Value of the share remains same so shareholders get the benefit of increased dividends.
• Bonus issue are not taxable at the time of issue in the hands of the shareholders.
• Shareholder might have to pay tax if they sell the shares.
• Addition of outstanding shares decreases the stock price, making the stock more affordable for retail investors.
• The record date for the bonus share will be announced and all shareholders as on record date will be entitled to receive bonus.
• Bonus issue of 1:3 means that the shareholder will get 1 share for every 3 shares held i.e. if shareholder has 300 shares, then he will get 100 more shares.