You own 100 shares of a company on the DSE. One morning your BO account shows 120 shares — but the price per share has dropped. Another day, you receive a letter asking you to pay Tk 1,110 per share for new stock or lose your proportional ownership. Both are corporate actions. Both change what you hold. And if you do not understand the difference, one of them will cost you money you did not plan to spend.
Corporate actions on the Dhaka Stock Exchange fall into four categories: bonus shares, rights issues, cash dividends, and stock splits. Each one changes something different — your share count, your cash position, your cost basis, or your ownership percentage. Confusing them is how retail investors make expensive mistakes on the DSE. Here is exactly how each one works, what it does to your portfolio, and why companies choose one over another.
Bonus Shares: Free Stock That Is Not Exactly Free
When a company declares a 20% bonus, it converts retained earnings into share capital and deposits additional shares into your BO account. You held 100 shares, now you hold 120. No cash leaves your pocket.
But the market adjusts. The ex-bonus price recalculates proportionally — if the stock traded at Tk 600 before a 20% bonus, the adjusted price becomes Tk 500 (Tk 600 × 100 / 120). Your total value has not changed. What has changed is your cost basis: if you originally paid Tk 400 per share, your new cost per share is Tk 333.33 across 120 shares. That recalculation matters at tax time when you assess capital gains.
Square Pharmaceuticals has been a consistent dividend payer — 120% cash for FY2024-25, 110% for the prior year — and has historically declared stock dividends alongside cash. Well-managed companies use bonus shares to improve liquidity and signal confidence in future earnings.
The risk is real, though. The Business Standard documented the Stylecraft case in 2019: an 80% stock dividend sent shares from Tk 1,200 to Tk 2,890, then back to Tk 1,300 after the record date. The following year, a 410% stock dividend pushed the price to Tk 4,900 before it collapsed to Tk 1,400. BSEC now requires companies to justify bonus issuance with business expansion rationale, and Z-category companies face outright restrictions.
That manipulation pattern — accumulate before declaration, pump on announcement, dump after record date — is precisely why understanding the next corporate action matters even more.
Rights Issues: The Corporate Action That Demands Your Money
A rights issue is the opposite transaction. The company is not giving you shares — it is asking you to buy more at a set price, or accept dilution.
Berger Paints Bangladesh demonstrated this in 2025. BSEC approved 2,728,111 rights shares at Tk 1,110 each — Tk 10 face value plus Tk 1,100 premium — to raise approximately Tk 302 crore for its third factory at a National Special Economic Zone. The ratio was 1:1 for general shareholders: one new share for every share held. If you exercised, your cost basis blended the original purchase price with the Tk 1,110 subscription. If you did not exercise, your ownership percentage shrank as the company’s free float expanded from 5% to 10.28%.
That dilution risk is the critical distinction. Bonus shares distribute proportionally to everyone — your slice of the company stays the same. Rights issues force a choice: pay up or own less. And unlike bonus shares, the company walks away with fresh capital. Berger used it for factory expansion. Other companies use it to reduce debt or fund acquisitions.
The theoretical ex-rights price adjusts downward based on the subscription price and ratio, just as ex-bonus prices adjust. But the mechanism is different — and so is the signal. A rights issue says: we need capital. A bonus issue says: we have reserves to spare.
Cash Dividends and Stock Splits: The Two You Already Think You Understand
Cash dividends seem straightforward until you see the numbers. Grameenphone declared a record 330% cash dividend for FY2024 — Tk 33 per share, comprising Tk 16 interim and Tk 17 final. With profit of Tk 3,630 crore growing 10% year-over-year, that payout ratio hit 152.25% — exceeding current earnings and drawing from reserves. The share price drops by approximately the dividend amount on the ex-date, which on the DSE currently coincides with the record date under T+2 settlement.
Stock splits are the rarest corporate action on the DSE, and for a structural reason: BSEC set Tk 10 as the uniform face value for listed companies in 2009. A split reduces face value — a 5:1 split turns one Tk 10 share into five Tk 2 shares — but since most companies already trade at the minimum, there is little practical room. Unlike bonus shares, splits do not transfer reserves to share capital. They simply slice the existing pie into smaller pieces.
What This Means the Next Time Your Holdings Change
Every corporate action on the DSE ultimately answers one question: who is paying? Bonus shares cost you nothing today but dilute earnings per share going forward. Rights issues cost you cash now or ownership later. Cash dividends deliver income but reduce company reserves. Stock splits change nothing except the unit size.
The next time a company in your portfolio announces a corporate action, check two things before you react to the price movement. First, recalculate your cost basis — the pipeline from declaration date to record date to ex-date determines when adjustments hit. Second, ask what the company is signalling: distributing confidence, or raising capital it does not have.
The price adjustment is mechanical. The signal behind it is where the investment decision lives.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. Consult a licensed financial advisor before making investment decisions. Past corporate actions do not guarantee future patterns.