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Bonus shares represent simply a division of corporate pie into alarge number of pieces explain?
Wiki User
∙ 14y ago
Bonus shares are issued out of free reserves and balance in profit and loss account. These amounts get accumulated over a period of time. Such accumulation makes it a larger pie.
These accumulated amount belong to the shareholders. These got accumulated instead of paying dividends. The larger pie is now distributed to the shareholders. Such a distribution is made on the basis of existing shareholding. Hence bonus shares is nothing but distribution of the larger pie to all by distributing them in small pieces in the ratio of the shares they hold.
Wiki User
∙ 14y ago
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