Glossary · Corporate Actions
Bonus Shares
Additional shares issued to existing shareholders free of charge, in proportion to their current holdings. A company may issue bonus shares instead of or alongside a cash dividend.
01—What is Bonus Shares?
The definition — and what it means in practice.
Bonus shares are additional shares a company issues to existing shareholders free of charge, in proportion to their current holdings. They are a corporate action that increases the number of shares you own without you paying new money. Companies may issue bonus shares instead of, or alongside, a cash dividend. Your ownership percentage stays broadly the same because all eligible shareholders receive the bonus in the same ratio.
Bonus shares matter because they change the size of your holding and the per-share price dynamics. After a bonus issue, the market price per share typically adjusts to reflect the higher number of shares, so the total value of your investment may not change just because you received extra shares. Investors also track bonus announcements as signals about how a company is choosing to distribute value and manage its share capital.
If you own 100 shares and the company declares a 10% bonus, you receive 10 extra shares free, so you end up with 110 shares.
Bonus shares received = Shares held × Bonus percentage
Use the declared bonus ratio/percentage; eligibility depends on being a shareholder on the record date.
- Bonus shares are free shares issued to existing shareholders in a fixed proportion.
- They increase share count, but do not automatically increase the total value of your investment.
- A company may use bonus shares instead of, or alongside, a cash dividend.
- Your ownership percentage is broadly unchanged because all eligible holders receive the same ratio.
02—How bonus shares works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), bonus shares are a type of corporate action you will see in company notices and corporate action calendars. If you hold shares in electronic form through the Central Depository Company (CDC) via your broker, the additional shares are credited to your CDC holding after the company’s process completes. Eligibility is based on the company’s record date for the bonus issue.
Bonus shares are often discussed alongside cash dividends in Pakistan because cash dividends are commonly declared as a percentage of face value (most listed shares have a Rs 10 face value). A bonus issue, by contrast, is expressed as a proportion of shares (for example, a percentage or a ratio). When you track returns on PSX holdings, it helps to separate share-count changes from cash receipts and price movement.
03—Common misconceptions
Where investors most often get this wrong.
Bonus shares are free profit, so my investment value must go up.
Bonus shares increase the number of shares you hold, but the share price typically adjusts because there are more shares outstanding. Value can still change due to market moves.
Bonus shares and a stock split are the same thing.
Both increase the number of shares, but they are different corporate actions. A bonus issue is an allotment of additional shares to holders; a split changes the number of shares by dividing existing shares.
I can buy on the record date and still get bonus shares automatically.
Corporate actions use specific dates (including record and ex-dates) to determine eligibility. Whether a purchase qualifies depends on the exchange’s timeline and settlement.
04—Using bonus shares on BSL
Where this term shows up across the platform — with live data.
- Check upcoming corporate actions and key dates on the Ex-Dates page.
- Review a company’s announcements and history from its page in Stocks.
- Understand related concepts like record dates via the glossary.
- Use the Stock Screener to compare companies on fundamentals before and after corporate actions.
05—Frequently asked questions
What investors ask about bonus shares on the PSX.
Frequently Asked Questions
Bonus shares are extra shares issued free to existing shareholders in proportion to what they already own. They are a corporate action and may be declared alongside, or instead of, a cash dividend.
Generally, no. Because bonus shares are issued proportionately to all eligible shareholders, your percentage ownership in the company typically remains broadly the same, even though your number of shares increases.
After a bonus issue, the market price per share typically adjusts to reflect the higher number of shares outstanding. The adjustment means the total value of your holding may not rise just because you received more shares.
Cash dividends in Pakistan can be subject to withholding tax, with rates depending on filer status. Bonus shares are not cash receipts, so they are treated differently from cash dividends; tax outcomes can depend on how gains are realised and applicable rules.
If you hold your PSX shares electronically through the Central Depository Company (CDC) via your broker, bonus shares are credited into your electronic holding once the corporate action is processed and allotted.
06—Related terms
Keep building the picture.
A direct payment made by a company to its shareholders, usually from profits, expressed as a rupee amount per share. Subject to withholding tax in Pakistan.
Any event initiated by a listed company that affects its shareholders. Common corporate actions include dividends, bonus shares, rights issues, stock splits, and mergers.
The cutoff date set by a company to determine which shareholders are officially registered and therefore entitled to receive a declared dividend or corporate action benefit. Distinct from the payout date, which is when the distribution is actually made.
The cutoff date for determining which shareholders are eligible to receive a declared dividend. Investors who buy shares on or after the ex-dividend date do not receive that particular dividend.
A corporate action in which a company divides its existing shares into multiple shares, reducing the share price proportionally without changing the overall market capitalisation.
An offer by a listed company to existing shareholders to purchase additional shares at a discounted price, in proportion to their current holdings. Used to raise new capital.
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