because a bonus issue does not represent an economic event – no wealth changes hands. the current shareholders simply receive new shares, for free, and in proportion to their previous share in the company. therefore, a bonus share issue is very similar to a stock split. the only practical difference is that a bonus issue creates a change in the structure of the company's shareholders' equity (in accounting). another difference between a bonus issue and a stock split is that while a stock split usually also splits the company's authorized share capital, the distribution of bonus shares only changes its issued share capital (or even only its outstanding shares).