New Delhi, April 23 -- Several companies announce various corporate actions, keeping in mind the financial health, interests of shareholders or to improve profitability. One such corporate action is the issue of bonus shares.

The issue of bonus shares is a corporate action where additional shares are given to existing shareholders. A company may decide to distribute additional shares as an alternative to dividends. The number of shares increases in the case of a bonus issue, but the total value of the investment stays the same. The price of the share is adjusted in accordance with the bonus issue; hence, the value of the holding remains the same.

If a shareholder holds 100 company shares with a face value of Rs.10 each, and the company ...