Understanding Corporate Actions: Bonus Shares vs Stock Splits
Corporate actions play a crucial role in shaping an investor’s portfolio and influencing stock prices in the market. Among the most common corporate actions are bonus shares and stock split. Although both aim to improve liquidity and make shares more affordable for retail investors, their structure, purpose, and impact differ. This blog explains bonus shares and stock split in detail, helping investors clearly understand how each works and when companies choose one over the other. What Are Corporate Actions? Corporate actions are decisions taken by a company’s board of directors that directly affect shareholders. These actions may alter the number of shares outstanding, share price, or ownership structure. Common corporate actions include dividends, mergers, buybacks, bonus shares, and stock split. Among these, Bonus shares and stock split are non-cash actions, meaning shareholders do not receive money but see changes in the number of shares they hold. Understanding Bonus Shares...