A bonus issue gives existing shareholders additional shares for free, in a fixed ratio. In a 1:1 bonus, you get 1 extra share for every share you already hold — but the share price adjusts downward proportionally on the same day, so your total holding value doesn’t change immediately.
Why Companies Issue Bonus Shares
Mainly to make individual shares more affordably priced and improve liquidity — sometimes also read by the market as a signal of management’s confidence in future growth, though it creates no direct value by itself.
Related Reading
See the full explanation with a worked example in What Are Stocks? Ownership, Price, and Value Explained.