Right Shares vs. Bonus Shares: Know the Difference
By Shumaila Saeed || Published on January 19, 2024
Right Shares are offered to existing shareholders at a discount, whereas Bonus Shares are additional free shares given to existing shareholders.
Key Differences
Right Shares are issued by companies to their existing shareholders, offering them the opportunity to buy additional shares at a discounted price. On the contrary, Bonus Shares are issued without any cost, as a reward to the existing shareholders, utilizing the company's accumulated profits.
Shumaila Saeed
Jan 19, 2024
While Right Shares require shareholders to pay an additional amount to acquire more shares, Bonus Shares are allocated based on the number of shares already owned without any extra payment. This distinction highlights the financial commitment needed for Right Shares, unlike Bonus Shares.
Shumaila Saeed
Jan 19, 2024
The issuance of Right Shares is often a strategy to raise additional capital for the company. In contrast, Bonus Shares are distributed when a company wishes to reinvest its profits into the business while rewarding its shareholders.
Shumaila Saeed
Jan 19, 2024
Right Shares give a privilege to existing shareholders to buy shares before the public, maintaining their ownership percentage. Bonus Shares, however, are more about distributing additional shares, reflecting the company's growth and profitability.
Shumaila Saeed
Jan 19, 2024
In the case of Right Shares, shareholders can choose to buy or ignore the offer. With Bonus Shares, the additional shares are automatically added to the shareholders' portfolios, signifying a direct increase in their holdings.
Shumaila Saeed
Jan 19, 2024
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Comparison Chart
Cost to Shareholders
Shareholders pay at a discounted price
No additional cost to shareholders
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Jan 19, 2024
Purpose
To raise additional capital
To reinvest profits and reward shareholders
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Jan 19, 2024
Impact on Ownership
Maintains or increases ownership share
Increases ownership share without dilution
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Jan 19, 2024
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Right Shares and Bonus Shares Definitions
Right Shares
Shares offered to existing shareholders at a discounted price.
The company offered right shares to finance its expansion.
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Jan 08, 2024
Bonus Shares
Additional shares given free of cost to existing shareholders.
The bonus shares increased her holdings in the company.
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Jan 08, 2024
Right Shares
Privileged offer to current shareholders before public issuance.
The right shares were issued before the new public offering.
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Jan 08, 2024
Bonus Shares
Reflects company’s profitability and desire to reinvest profits.
The profitable year resulted in the distribution of bonus shares.
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Jan 08, 2024
Right Shares
A method for companies to raise additional funds.
Right shares were issued to gather capital for new projects.
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Jan 08, 2024
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Bonus Shares
Reward to shareholders using the company's accumulated profits.
Bonus shares were distributed from the company's retained earnings.
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Jan 08, 2024
Right Shares
An opportunity for shareholders to maintain their ownership stake.
He bought right shares to keep his percentage in the company.
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Jan 08, 2024
Bonus Shares
Increase in share capital without additional investment from shareholders.
The issuance of bonus shares expanded the company's share capital.
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Jan 08, 2024
Right Shares
Shareholders’ right to purchase additional shares.
As an investor, she exercised her rights to buy right shares.
Shumaila Saeed
Jan 08, 2024
Bonus Shares
Automatic allocation of extra shares to current shareholders.
His portfolio grew automatically with the new bonus shares.
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Jan 08, 2024
Repeatedly Asked Queries
What are Bonus Shares?
Free additional shares given to shareholders from profits.
Shumaila Saeed
Jan 19, 2024
Are Right Shares common in startups?
Less common, as they require capital infusion.
Shumaila Saeed
Jan 19, 2024
Can shareholders decline Right Shares?
Yes, they can choose not to purchase.
Shumaila Saeed
Jan 19, 2024
What is the impact of Right Shares on share capital?
It increases with the new share issuance.
Shumaila Saeed
Jan 19, 2024
What are Right Shares?
Additional shares offered to existing shareholders at a discount.
Shumaila Saeed
Jan 19, 2024
Are Bonus Shares optional for shareholders?
No, they are automatically allocated.
Shumaila Saeed
Jan 19, 2024
Do Bonus Shares dilute ownership?
No, they increase shareholding proportionately.
Shumaila Saeed
Jan 19, 2024
Do Right Shares dilute ownership?
Not if existing shareholders purchase them.
Shumaila Saeed
Jan 19, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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