A company decides to issue bonus shares in the ratio 2:1 to its existing shareholders. Which of the following statements about this bonus issue is CORRECT?

A bonus issue involves converting a company's accumulated free reserves, securities premium, or capital redemption reserve into fully paid-up equity shares distributed to existing shareholders at no charge. The total net worth remains unchanged — only its composition shifts from reserves to paid-up capital. There is no cash inflow since shares are issued without payment. EPS typically decreases after a bonus issue because the number of shares increases while profit remains unchanged. Bonus shares are not exclusively issued from securities premium; free reserves and capital redemption reserves are also permissible sources under Section 63 of the Companies Act 2013.