What is a bonus share in Nepal?

A bonus share (also called a stock dividend) is a free share issued by a company to its existing shareholders out of its reserves. Instead of paying cash, the company capitalises part of its retained earnings and issues new shares proportionally. If you own 100 shares and the company declares a 10% bonus, you receive 10 new shares. The total number of shares in circulation increases, so the share price adjusts downward proportionally on the ex-dividend date.

What is a rights share in Nepal?

A rights share (also called a rights issue) is an offer by a company to its existing shareholders to buy new shares at a fixed price, usually below the current market price, in proportion to their existing holdings. Unlike bonus shares, you must actively apply and pay to receive rights shares. If you do not apply within the issue period, the rights lapse and you miss them.

Do bonus shares change my cost basis for CGT?

Yes. When you receive bonus shares, your WACC (weighted average cost price) per share decreases because the same total cost is now spread across more shares. Nepal's CGT rules use FIFO and the CDSC-recorded WACC. Punji's CGT calculator reflects this: after a bonus, it spreads your original cost across the new total quantity so your tax calculation stays accurate.

Are rights shares always profitable?

Not necessarily. The issue price is usually below market, but you are paying cash for new shares, and the market price of your existing shares also adjusts on the ex-rights date. Whether it is beneficial depends on the issue price relative to the true value of the company and your personal cash flow. Missing a rights issue dilutes your ownership percentage, since others' shares also adjust but yours does not increase.

Where can I apply for rights shares in Nepal?

Rights issues in Nepal are applied for through the company's registrar or via Mero Share (the CDSC portal). The prospectus announces the issue period, the price, and the ratio. Watch for the announcement and apply before the closing date; there is no extension after the period ends.

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Bonus shares vs rights shares in Nepal, explained.

Nepali companies regularly issue both bonus shares and rights shares. The two look similar at first, but they work very differently: one arrives automatically and one requires you to act. Here is what each one is, how it affects your holding, and what you need to do.

6 min read · Updated · 7 Jul 2026

What are bonus shares?

When a company earns profit and decides not to pay it out as cash, it can instead capitalise those reserves and issue new shares to existing shareholders. These new shares are called bonus shares (sometimes called a stock dividend).

The ratio is announced as a percentage of your current holding. If you own 200 shares and the company announces a 20% bonus, you receive 40 new shares and now hold 240. No payment is required. The new shares appear in your DEMAT account automatically after the record date processing.

What happens to the share price after a bonus?

The total value of the company does not increase simply because it issued more shares. On the ex-bonus date, NEPSE adjusts the price downward to reflect the dilution. The formula is:

Adjusted price = Previous close price divided by (1 + bonus ratio)

For a 20% bonus, if the stock closed at NPR 600 the day before, it opens ex-bonus at NPR 500. You now hold 20% more shares at a 20% lower price, so the total value of your position on that morning is the same.

How do bonus shares affect your cost basis and CGT?

After a bonus issue, your cost basis per share decreases because your original investment is now spread across more shares. This matters for capital gains tax: a lower WACC (weighted average cost price) means a larger taxable gain when you eventually sell. Nepal uses the CDSC-recorded WACC as the cost basis. Use Punji's CGT calculator to model the effect before you sell.

What are rights shares?

A rights issue is an offer by the company to let its existing shareholders buy newly issued shares at a set price, usually below the current market price. The allocation is proportional to your current holding (for example, 1 new share for every 10 existing shares).

Unlike bonus shares, rights shares are not free. You must:

Watch for the announcement in the financial press or on NEPSE.
Apply during the open issue period (typically a few weeks).
Pay the issue price via the prescribed channel (often through Mero Share or the company's registrar).

If you do not apply before the closing date, your rights expire. You will not receive the shares, and because new shares have been issued to others, your ownership percentage in the company is diluted.

What happens to the share price after a rights issue?

The share price also adjusts on the ex-rights date, based on the theoretical ex-rights price (TERP), which blends the market price and the issue price in proportion to the ratio. In practice, market sentiment also plays a role, so the actual price may deviate from the theoretical adjustment.

Side-by-side comparison

Feature	Bonus shares	Rights shares
Payment required?	No	Yes, at the issue price
Action required?	None; shares arrive automatically	Must apply during issue period
Source of new shares	Capitalised from reserves	New share issuance; raises fresh capital
Price adjustment on ex-date	Yes, proportional to bonus ratio	Yes, blended theoretical price
Effect on cost basis	WACC per share decreases	WACC changes based on issue price vs original cost