A bonus issue (capitalisation issue) is when a company issues additional shares free of charge to existing shareholders, in proportion to their holding — e.g. a 1:1 bonus gives one extra share per share held. No new cash enters the company; the shares are funded by capitalising free reserves.
Effect on price and value
A 1:1 bonus doubles the share count and halves the per-share price in theory. Your total holding value stays unchanged immediately after — but bonus issues are often seen as a management confidence signal.
Why it matters for unlisted shares
Unlisted companies can declare bonus issues. When they do, your demat is credited with additional shares. Your cost per share adjusts proportionally — important for calculating LTCG correctly when you sell.
Example: Original 500 shares at ₹200 = ₹1 lakh cost. After 1:1 bonus: 1,000 shares at ₹100 adjusted cost each — total cost still ₹1 lakh.
This adjusted cost must be used for capital-gains computation, not the original ₹200.