Right Shares vs Bonus Shares: Key Differences Every Investor Should Know
Right Shares are new shares offered to existing investors at a price, usually below market, letting them keep proportional ownership. Bonus Shares are free extra shares given from a company’s reserves, simply splitting the same pie into more slices.
People confuse them because both land extra shares in your account. The mix-up feels like getting a “gift” either way, yet one asks for cash while the other doesn’t—leading many to assume they’re the same perk.
Key Differences
Right Shares: paid, maintain ownership ratio. Bonus Shares: free, no cash needed. Rights may dilute if you skip; bonuses just slice existing value thinner. Rights require action; bonuses appear automatically.
Which One Should You Choose?
If you have spare cash and believe in growth, grab Rights to keep your stake. If you prefer no outlay and accept thinner slices, enjoy Bonuses. Check your goals and liquidity first.
Do I pay for Right Shares?
Yes, you pay the set offer price; otherwise your ownership shrinks.
Will Bonus Shares make me richer?
Not directly; the total value stays the same, just split into more shares.
Can I sell either right away?
Usually yes, once they’re credited and normal trading rules apply.