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A bonus issue is one of the most common and investor-friendly corporate actions in the stock market. Many new investors want to know what bonus shares are, who is eligible, how record dates work, and when bonus shares get credited to the demat account.

This guide explains everything in very simple language with real examples so you can understand how bonus issues work and how they affect your investments.

What Is a Bonus Issue?

A bonus issue is when a company gives free additional shares to its existing shareholders.
Instead of giving cash dividends, companies sometimes reward investors by issuing extra shares.

Important: You get more shares, but the total value of your investment remains the same because the share price adjusts proportionately after the bonus.

Example for Simple Understanding

Mr. A owns 100 shares at ₹10 each.

The company announces a 2:1 bonus.
This means: For every 1 share, you get 2 shares free.

So Mr. A gets:

100 × 2 = 200 bonus shares

📌 Total Shares After Bonus

100 original + 200 bonus = 300 shares

📌 Value Calculation

Before bonus: 100 × ₹10 = ₹1000

After bonus: 300 shares at ₹3.33 ≈ ₹1000

✔ Number of shares increases
✔ Total value remains the same

Record Date — What Does It Mean?

The Record Date is the date on which the company checks its records to identify shareholders who will receive bonus shares.

If your shares are in your demat account on the record date, you qualify for the bonus.

Who Is Eligible for Bonus Shares?

To be eligible:

You must buy shares at least 1 trading day before the Ex-Date.
You must hold the shares in your demat account on the Record Date.

If you buy shares on or after the Ex-Date, you will not get bonus shares.

What Is Bonus Ratio?

A bonus ratio shows how many free shares you receive.

Bonus Ratio	Meaning
1:1	1 free share for every 1 share
2:1	2 free shares for every 1 share
3:2	3 free shares for every 2 shares
5:1	5 free shares for every 1 share

When Will Bonus Shares Be Credited to My Demat Account?

Bonus shares are credited in two steps:

✔ Step 1: Credit to Demat (T+2 Days)

You will receive bonus shares in your demat account within T+2 days from the Record Date.
NSDL/CDSL will send an SMS/email when the shares are added.

But these shares cannot be traded yet.

✔ Step 2: Trading Approval (4–5 Days)

Initially, bonus shares are credited under a temporary ISIN.
This means they show in your demat, but:

You cannot sell them
They may not appear in your broker’s app (Kite, Groww, Upstox, etc.)

After the exchanges (NSE/BSE) and depositories (NSDL/CDSL) complete verification, the temporary ISIN is shifted to the permanent ISIN.

Timeline: Usually 4–5 days after T+2 credit.

Only after this approval do bonus shares become fully tradable and visible in your broker app.

How to Check Bonus Issue Details on NSE & BSE

⭐ On NSE Website

Go to NSE India
Search for the company name
Click Corporate Information
Select Corporate Actions

You will see: Bonus ratio, ex-date, record date, and official notices.

⭐ On BSE Website

Visit BSE India
Search for the company
Click Corp Info → Corporate Actions

Top 10 Most Asked FAQs on Bonus Issue

1. What is a bonus issue?

A bonus issue is when a company gives free additional shares to existing shareholders.

2. Are bonus shares free?

Yes, bonus shares are issued free of cost.

3. Why do companies issue bonus shares?

To reward shareholders and increase the stock’s liquidity.

4. Does a bonus issue increase my wealth?

No. You get more shares, but the price adjusts proportionately. If you hold 100 shares of ABC Company on the record date at ₹100 each, your total investment is ₹10,000. When the company announces a 1:1 bonus, you get one extra share for every share you already own. This doubles your shares from 100 to 200. Since the overall investment value stays the same, your average price adjusts from ₹100 to ₹50 per share. In short, your number of shares increases, your average price reduces, but your total investment value remains unchanged.

5. What is the ex-date in a bonus issue?

The ex-date is the cutoff date for buying shares before ex-date to be eligible for bonus shares, if ex-date and record date is on the same date.

6. When will I receive bonus shares?

Within T+2 days from the Record Date.

7. Why are bonus shares not tradable immediately?

Because they are first credited under a temporary ISIN.

8. When will bonus shares become tradable?

After trading approval, usually within 4–5 days after T+2 credit.

9. Why are bonus shares not showing in Kite or Groww?

They show only after the temporary ISIN is converted to a permanent ISIN.

10. Are bonus shares taxable?

Bonus shares are taxed only when sold, under capital gains tax rules.

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Bonus Issue in Stock Market: Meaning, Record Date, Eligibility, Ratio & FAQs