A bonus issue of share which is also known as scrip or capitalization issue refers to providing shareholders with additional shares free of cost. It is a strategy used by companies to incentivize existing holders without distributing dividends in the form of cash.

A company issues bonus shares in a certain ratio on the basis of existing shares. For example, if a company issues bonus shares in the ratio of 1:2 then it means that the one share is issued for every 2 shares held by an existing shareholder. To find the number of bonus shares issued to any shareholder you can use the bonus issue ratio formula i.e. Bonus Issue Ratio = Number of bonus share/Number of existing shares.

Know in details about what is bonus share