Bonus Shares, Right Shares & Dividends Explained

NEPSE companies reward shareholders in three main ways: cash dividends, bonus shares and right shares. They sound similar but work very differently — and each moves the share price. Here's how they work.

1. Cash dividend

A cash dividend is a direct cash payout per share from the company's profit. It's announced as a percentage of face value (Rs. 100). So a "10% cash dividend" pays Rs. 10 per share.

• Paid into your linked bank account after approval (usually at the AGM).
• In Nepal, cash dividends are taxed at 5%, deducted at source — so you receive the net amount.

2. Bonus shares (stock dividend)

A bonus share is a dividend paid in extra shares instead of cash. A "20% bonus" gives you 20 extra shares for every 100 you hold, credited free to your DEMAT.

• You own more shares, but the company's total value hasn't changed — so the price adjusts down proportionally on the ex-bonus date.
• Bonus shares are how many Nepali companies (especially banks) grow their capital and reward long-term holders.
• There's a small tax on bonus shares as well, handled at distribution.

3. Right shares

A right share lets existing shareholders buy new shares, usually at face value (Rs. 100), in proportion to their holding. A "1:1 right" means you can buy 1 new share for each share you own.

• Unlike bonus shares, right shares are not free — you pay Rs. 100 per new share you take up, via Meroshare (ASBA), during the right-offer window.
• The company raises fresh capital this way.
• If you don't apply within the deadline, you forgo the right (and your stake gets diluted).
• Because new shares enter at Rs. 100, the market price typically adjusts down after the right issue.

Book closure and the ex-date

To receive any of these, you must own the share before the book closure date. On book closure, the company freezes its shareholder register to decide who's eligible. After the ex-date, the price is adjusted for the dividend/bonus/right — so a "price drop" on the ex-date is usually just this adjustment, not a real loss.

Quick comparison

• Cash dividend — money in your bank; taxed 5%.
• Bonus share — free extra shares; price adjusts down.
• Right share — you pay Rs. 100 to buy more; optional but skipping dilutes you.

Cash rewards you now, bonus grows your share count, and rights ask you to invest more. None are "free money" — each is balanced by a price adjustment — but understanding them is key to reading NEPSE corporate actions correctly.

Track dividend, bonus and right announcements on the NepseIQ news feed.