Bonus shares are issued by companies to make share prices more affordable for small investors. If a company's profits double but the number of shares stays the same, the earnings per share would also double, making each share expensive. To address this, companies issue bonus shares to existing shareholders. This increases the total number of shares, keeping the company's total capital the same. But it reduces the earnings and price per individual share, making the stock more affordable and liquid. This benefits both small investors and the company.