What is meant by Bonus shares? And when the company issues the bonus shares.

Bonus shares are additional shares issued to existing shareholders of a company at no cost. In other words, the company issues free shares to its shareholders based on the number of shares they already own. Companies usually issue bonus shares when they have accumulated large reserves.

The issue of bonus shares is based on a company's retained earnings or accumulated profits that have not been distributed as dividends. A company's board of directors proposes the issuance of bonus shares, and the decision must be approved by the shareholders in a general meeting. The bonus shares are issued to the shareholders in proportion to their existing shareholding. For example, if an investor owns 100 shares in a company and the company announces a 1:1 bonus issue, the investor will receive an additional 100 shares, and the total shareholding will be 200 shares

By  issuing the bonus shares is to increase the number of outstanding shares and reduce the company's share price. This makes the shares more affordable and increases the liquidity of the stock. Additionally, bonus shares also reflect positively on the company's financial health and can boost investor confidence.

Investors receive the bonus shares on the record date, which is a specific date announced by the company. The record date is typically a few weeks after the bonus share announcement and is used to determine which shareholders are eligible to receive the bonus shares. Once the record date passes, the bonus shares are credited to the investors' demat account within a few days.