Q.Explain the following term/concept:
Bonus shares

The odd one out is Employees Stock Option Scheme (ESOS), because it is offered to employees, not to existing shareholders.

Bonus shares are fully paid shares issued free of cost to existing equity shareholders out of the company's accumulated profits or reserves. Rights shares are additional shares offered first to the existing equity shareholders in proportion to their current holding. In both cases, the shares go to the people who already own equity in the company.

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The statement is True. Bonus shares are issued as fully paid-up shares.

Bonus shares are additional shares given free of cost to existing equity shareholders in proportion to their holdings, by capitalising the company’s accumulated profits or reserves.

• Since the company converts its own reserves into share capital, the shareholder is not required to pay anything for these shares. …