Bonus Shares Adjusted Price Calculator
When a company in NEPSE announces bonus shares, the share price drops after the book closure date.
Yet every time, investors panic because the chart suddenly shows a drop.
Nothing was lost.
This calculator shows you the adjusted price after the bonus issue, so you can see exactly what changed — and what didn’t.
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What happens to the share price after bonus shares in NEPSE?
When a company in NEPSE announces bonus shares, the total number of shares increases. However, the company’s overall value does not increase immediately. Because more shares now represent the same total value, the price per share adjusts downward.
This adjustment happens automatically after the book closure date. The stock exchange recalculates the price so that the total market capitalization remains unchanged.
In simple terms:
You own more shares, but each share is worth proportionally less.
How do I understand the bonus shares percentage?
When a company declares a 20% bonus, it doesn’t mean you’ve made a 20% profit overnight. The percentage is based on the share’s par value, not its market price.
In Nepal, the par value for most companies in NEPSE is usually just NPR 100, far below the market price. A 20% bonus simply means the company is giving you 20 additional shares for every 100 shares you already hold, at par value.
The market price will later adjust downward to reflect the increased number of shares, so your total investment value remains roughly the same.
In other words, receiving bonus shares is not an instant profit — it’s a redistribution of value, giving you more shares instead of cash, while the overall value of your investment stays unchanged.
Do bonus shares increase my profit?
This may surprise a lot of investors in Nepal.
Short answer: No, not immediately.
Bonus shares do not create instant profit. Your total investment value stays the same right after the price adjustment, just like in the case of a right shares adjustment.
For example:
- Before bonus: 100 shares × Rs. 300 = Rs. 30,000
- After 50% bonus: 150 shares × Rs. 200 (Adjusted Price) = Rs. 30,000
There is no automatic gain.
Long-term profit depends on:
- Company earnings growth
- Business expansion
- Market demand
- Future dividend policy
Bonus shares are a capital restructuring event — not a cash reward.
Bonus shares in NEPSE explained
In NEPSE, bonus shares are issued from a company’s retained earnings or reserves. Instead of distributing profits as cash dividends, the company converts part of those reserves into additional shares for existing shareholders.
Bonus issues are common in sectors such as commercial banks, hydropower companies, and insurance companies.
In Nepal, bonus announcements often attract short-term investor attention. Many retail investors view bonus shares as “free shares,” which can temporarily increase buying pressure before book closure.
However, fundamentally, bonus shares do not increase intrinsic value. They simply redistribute ownership into a larger number of shares.
Bonus Shares vs Cash Dividend
Bonus shares and cash dividends are very different.
When a company announces bonus shares, it increases the number of shares you hold without giving you any cash. After the book closure date, the market automatically adjusts the share price downward to reflect the higher number of shares in circulation.
Your total investment value does not change at that moment — it is simply divided across more shares. There is no instant profit; the benefit depends on future price appreciation.
Meanwhile, a cash dividend works differently. Instead of issuing additional shares, the company distributes a portion of its profits directly to shareholders as cash.
You receive immediate income, and the share price typically drops by roughly the dividend amount after the book closure date. Your share count remains the same, but part of the company’s value is transferred to you in cash.
Both actions return value to shareholders — one in the form of additional shares, the other in the form of immediate money — but neither creates free wealth overnight.
What happens after the Book Closure Date in NEPSE?
The day after the book closure date is the date when a stock begins trading without the value of the announced bonus shares.
If you buy the stock after the date, you will not receive the bonus shares. Only investors who own the stock before the book closure date are eligible.
On the ex-bonus date, the stock price adjusts automatically, and your share count on Meroshare increases later after approval. Your bonus shares are credited after regulatory processing
This is why many investors see a sudden price drop — it is a mechanical adjustment, not a crash.
Are Bonus Shares Taxable in Nepal?
Yes — bonus shares do have tax implications in Nepal. It’s not capital gains tax (because you haven’t sold anything), but the distribution of bonus shares is treated as a form of dividend under Nepalese tax law.
Here’s how it works in practice:
Legally, issuing bonus shares is considered a distribution of profit, much like paying a dividend — even though it’s paid in shares instead of cash.
Under the Income Tax Act, this distribution is treated similarly to a dividend, and companies are required to handle the withholding tax on this distribution (typically around 5%).
Until recently, many companies passed this tax obligation onto shareholders — meaning you had to pay the tax yourself before the bonus shares would be credited to your account.
A recent directive from SEBON now requires listed companies to pay the dividend tax on bonus shares themselves instead of forcing shareholders to do it manually, which simplifies the process for most investors.
This is why you will see most companies declaring a minimal amount of cash dividend for tax purposes alongside a larger percentage of bonus dividend.