Issuance of bonus shares is not uncommon in the corporate world, in regard to companies having sizeable accumulated profits. However, the term ‘bonus shares’ is not defined in the Companies Act, 1956, even though there are many legal safeguards governing bonus shares. This article deals with the concept of bonus shares and the legal and regulatory framework governing the same. Introduction Bonus Share is not defined under the Indian Companies Act. In its ordinary sense, the term represents, a further issue of capital as a fully paid up share without any payment in cash. The Supreme Court in the case of Standard Chartered Bank v. Custodian1 defined Bonus Share as follows : “Bonus Share is an accretion A bonus share is issued when the company capitalizes its profits by transferring an amount equal to the face value of the share from its reserve to the nominal capital. In other words, ....