Differentiate between "Bonus Issue" and "Right Issue" to existing shareholders?

The following are the main difference between Bonus Issue and Right Issue: Bonus issues are made out of the accumulated reserves in the employment of the business, which in no way contribute to the increased earning capacity of the business. However, in the case of right issues, the existing holders are offered the shares forming part of the new issue; more funds flows into the company for improving the earning capacity. In case of Bonus Issue, the rate of dividend is lower since the same quantum of profit would be distributed over a larger number of shares. However, in case of right issue, a progressive company generally picks up the old rate of dividend after a short period. In case of Bonus Issue, the market value of the shares is lower. However in case of Right Issue, share value will naturally depend on the effectiveness with which new funds will be used.