Stock split vs bonus issue: the difference

On stock split vs bonus issue, both actions increase the number of shares outstanding without raising any new cash, and both leave your holding worth the same at the instant they take effect. The difference is in the accounting. A stock split sub-divides each share into a smaller face value, so the share count rises but paid-up capital does not move. A bonus issue hands out free shares by capitalising the company's reserves, so the count and paid-up capital both rise while reserves fall. Source: Companies Act, 2013.

Stock split vs bonus issue: the core differences

The two look similar on a screen but sit on different parts of the balance sheet.

Why do companies do either?

Both are often used to lower the per-share price and widen participation, since a lower price can make the stock easier to trade in round lots. A bonus issue also signals that the company has accumulated reserves it is converting into capital.

Because no money comes in, neither action changes the company's underlying value on the day it happens. You simply hold more shares at a proportionally lower price. Source: Companies Act, 2013.

Where do you see the effect?

Both a split and a bonus are announced to the stock exchanges with a record date, and both change the shareholding pattern mechanics by resetting the share count. They differ from capital-raising routes such as a rights issue or a share buyback, which do move cash.

So on stock split vs bonus issue, the useful takeaway is a distinction, not a winner: a split changes face value, a bonus capitalises reserves, and neither adds cash. Flock reads the public corporate-action disclosures and keeps each one dated and sourced. What any of it means for your own decision is your call to make.