Bonus shares and stock splits are key corporate actions companies use to reward existing investors and make their stock more accessible in the market. Bonus shares are additional equity shares issued free of cost to current shareholders, funded from a company’s accumulated reserves and surplus. While they increase the total number of shares held by an investor, the overall value of the holding remains unchanged immediately after the issue. Such moves are often seen as a sign of a company’s robust financial health and are aimed at reinforcing shareholder confidence.
Stock splits work similarly in principle. In a split, the face value of each existing share is reduced and divided into multiple shares, thereby increasing the total share count. Like bonus issues, a split does not alter the total investment value but lowers the per-share price. This makes the stock more affordable for retail investors, improves trading volumes, and enhances market liquidity.
In recent weeks, several listed firms have announced bonus issues and splits to encourage wider market participation and underline their balance sheet strength. Two notable announcements came from Life Insurance Corporation of India and PAE Limited.
Life Insurance Corporation of India announces 1:1 bonus issue LIC, India’s largest life insurer with a market capitalization of Rs. 5,14,443.69 crore, closed at Rs. 813.35 per share, up 1.58% from the previous close of Rs. 800.70. The state-owned insurer has declared a bonus issue in the ratio of 1:1. This means shareholders will receive one additional fully paid-up equity share of Rs. 10 face value for every one share already held. The record date for determining eligible shareholders has been fixed as 29th May, 2026.
To illustrate: an investor holding 1,000 shares of LIC before the record date will be credited with 1,000 bonus shares. Post-issue, the total holding will double to 2,000 shares. While the share price will adjust proportionately after the ex-bonus date, the investor’s total portfolio value remains the same at the time of credit.
Established in 1956 and headquartered in Mumbai, LIC is a government-owned insurance and investment giant. It remains the dominant player in India’s life insurance sector and is widely regarded as one of the most trusted financial institutions in the country, with a policyholder base running into hundreds of millions.
Bonus Issues in Focus: LIC and PAE Limited Reward Shareholders with Free Shares to Boost Liquidity and Signal Financial Strength
