BAJAJ BROKING
March 25, 2025
7 mins read
Bonus shares are additional shares issued by a company to its existing shareholders at no extra cost. These shares are distributed based on the number of shares a shareholder already holds. Bonus shares increase the number of outstanding shares while maintaining the overall value of the investment. The process of crediting these shares to a Demat account follows a structured timeline, with important dates such as the record date and ex-date determining eligibility. Investors tracking their IPO allotment status, upcoming IPOs, and other corporate actions must understand how bonus shares are credited.
Bonus shares benefit investors by enhancing liquidity and making stocks more accessible. Since these shares are credited electronically to a free Demat account, they eliminate the need for physical certificates, ensuring seamless trading through a trading account online. Understanding how and when bonus shares get credited helps investors make informed financial decisions.
A bonus share issue is a corporate action where a company distributes additional shares to its existing shareholders in proportion to their current holdings. Companies issue bonus shares to capitalize on their retained earnings, rewarding shareholders without impacting their cash reserves. These shares are allotted based on a fixed ratio, such as 1:1, meaning one bonus share is issued for every existing share held.
Unlike dividends, which provide immediate cash returns, bonus shares increase an investor’s total holdings without additional investment. This move often attracts new investors and enhances market participation.
The record date is the cutoff date set by a company to determine which shareholders are eligible for a bonus issue. Investors who own shares before the record date will receive bonus shares, whereas those who purchase shares on or after this date will not qualify. As of January 31, 2025, India's Securities and Exchange Board (SEBI) has introduced an optional T+0 (same-day) settlement cycle for the top 500 stocks by market capitalization, in addition to the existing T+1 cycle. Under the T+0 settlement, trades are settled on the same day they occur, meaning investors must purchase shares before the record date to ensure eligibility for bonus shares. However, since most stocks still operating under the T+1 settlement cycle, investors need to buy shares at least one business day before the record date to qualify for bonus issues.
To receive bonus shares, investors must follow specific steps to ensure eligibility. The first and most crucial step is holding shares on the record date, which is the cutoff set by the company to determine eligible shareholders. To qualify, investors must purchase shares before the ex-date, which typically falls one business day before the record date. The ex-date is the date when the stock price adjusts to reflect the bonus issue, and new buyers are no longer eligible for bonus shares. Investors who purchase shares on or after the ex-date will not qualify, as their ownership will not be recorded in time for the company’s allocation process.
Apart from monitoring current IPO allotment status and upcoming IPOs, investors should also remain informed about corporate announcements regarding bonus share issues for their existing holdings. Companies announce bonus issues through stock exchange filings, press releases, and investor presentations. Keeping track of these updates ensures investors do not miss critical dates. Additionally, investors must hold onto their shares until the record date to maintain eligibility. Selling them beforehand could result in disqualification from receiving the bonus issue.
Once the record date has passed, the company processes the issuance of bonus shares. These shares are then credited directly to the shareholder’s demat account, usually within 15–20 business days, completing the bonus share allocation process.
The process of crediting bonus shares to a shareholder’s demat account follows a structured timeline. Generally, bonus shares take 15–20 days to be credited into an investor’s Demat account. This period starts after the record date, though the exact timeframe may differ depending on regulatory approvals, company procedures, and depository processing times. Once the record date has passed, the company finalizes the allocation and works with depositories to complete the credit process. Companies also update investors on a tentative date for bonus share credit.
Crediting bonus shares into your Demat account can take anywhere between 15 to 20 days post the record date. However, this timeline may vary based on company processes. When a company announces a bonus issue, it specifies two key dates: the record date, which determines shareholder eligibility, and the ex-date (typically one business day before the record date), after which buyers no longer qualify. After the record date, companies finalize shareholder data and initiate the corporate action through depositories like NSDL and CDSL. These depositories then process and distribute the bonus shares, with the allotment date marking the exact day the shares appear in investors’ accounts. Shareholders can verify the credit by checking their demat account statement or accessing updates through their depository’s online portal.
To invest and trade in shares, you have to open a Demat account. Several brokerage firms now offer free Demat accounts to investors to facilitate trading. Since shares from your regular trades are credited into this free Demat account, you must check this account to track bonus shares as well. Here’s a step-by-step guide on the same:
Step 1: Log in to Your Demat Account
Access your demat account using your stockbroker’s trading platform or mobile application.
Step 2: Navigate to the Portfolio or Holdings Section
Once logged in, go to the section that displays your investments. Look for tabs labeled Portfolio, Holdings, or My Investments, where all owned stocks are listed.
Step 3: Search for the Company’s Name
Find the specific company that issued the bonus shares. The additional shares should appear under the same stock name, reflecting the revised total quantity held.
Step 4: Confirm the Quantity of Shares
Check whether the bonus shares match the declared ratio. For example, in a 1:1 bonus issue, your total shareholding should have doubled after the credit.
Step 5: Download a Statement (Optional)
To keep records, download or request a transaction statement from your broker, showing the credit of bonus shares.
Step 6: Cross-Check with the Depository
For additional confirmation, log in to NSDL or CDSL, the depository linked to your demat account, to verify that the bonus shares have been credited successfully.
Bonus shares act as a strategic method for companies to reward shareholders while preserving their cash reserves. Investors should track bonus issue announcements while they are tracking IPO allotment status, current IPO, and upcoming IPO details to stay informed about market opportunities. They should also remember that holding shares before the record date ensures eligibility. Post the record and ex-dates, they must check their Demat accounts regularly to track the credit status of the bonus shares.
Understanding the bonus share crediting process helps investors maximize portfolio value while benefiting from increased liquidity and long-term capital growth. By integrating bonus shares into a well-diversified investment strategy that includes investing in mutual funds, ETFs, and margin trading facility (MTF), investors can optimize returns and maintain financial stability.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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Yes. When the company allots bonus shares to you, these shares are automatically credited to your Demat account. It takes a couple of weeks to allot these shares after the company finalizes the bonus issue. Investors do not need to take any additional action to receive them.
Bonus shares may take 15-20 business days to reflect in a Demat account after the record date. If they are not credited within this timeframe, investors should check with their Depository Participant (DP) or verify corporate announcements for any delays in processing.
The record date is the cutoff date set by the company to determine which shareholders are eligible for the bonus shares. Investors must hold the company’s stock on this date to receive the bonus issue.
The record date determines which shareholders are eligible for bonus shares, while the ex-date is typically set one business day before the record date. Investors must buy shares before the ex-date to be eligible for the bonus issue.
Generally, bonus shares are credited within fifteen to twenty days post the record date. Initially, they may appear under a temporary ISIN and become fully tradable once regulatory approvals are completed.
No, investors must purchase shares before the ex-date to qualify for bonus shares. Buying shares on or after the record date does not make an investor eligible for the bonus issue.
The credit date for Reliance bonus shares depends on the company’s announcement and processing time. Investors should track official communications from Reliance Industries or check their trading account online for updates.
The BPCL bonus record date is determined by Bharat Petroleum Corporation Ltd. and is announced via stock exchanges and regulatory filings. Investors should check company disclosures for the official record date.
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