bonus issue

bonus issue
Also known as a scrip issue or capitalisation issue. An issue of new shares to existing shareholders in the same proportions as their existing holdings. Although the shareholders do not pay for the new shares they are not receiving something for nothing (as the term "bonus issue" may imply) because the value of their existing holding will go down in proportion to the amount of new shares issued, so that the total value of their holding does not change significantly. It is simply a bookkeeping transaction whereby a company turns part of its accumulated reserves into new shares, and reduces the value at which each share trades. If a company's shares have a very high market quotation, the company may arrange a bonus issue in order to reduce the value at which shares trade and so theoretically increase the marketability of the shares.
Related links
dividends
convertible bonds and exchangeable bond

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • bonus issue — noun An issue of additional shares (bonus shares) to a company s shareholders in proportion to their existing shareholding, representing a capitalization of reserves • • • Main Entry: ↑bonus …   Useful english dictionary

  • bonus issue — Also known as a scrip issue, a capitalisation issue, a free issue or a gratis issue. It is the issue of new fully paid shares in a company to existing shareholders for free on a basis pro rata to existing holdings. For example, a 1 for 4 bonus… …   Financial and business terms

  • bonus issue — (Also scrip issue / capitalisation issue) Security holders are awarded additional assets free of payment from the issuer in proportion to their holding. A bonus issue is typically represented by shares, rights or warrants. Nominal value does not… …   Euroclear glossary

  • Bonus Issue — An offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout. Also known as a scrip issue or capitalization issue . New shares are issued to… …   Investment dictionary

  • bonus issue — /ˈboʊnəs ɪʃu/ (say bohnuhs ishooh) noun a free issue of shares to shareholders of a company; scrip issue. Also, bonus …  

  • bonus issue — /ˌbəυnəs ɪʃu:/ noun a scrip issue or capitalisation issue, where a company transfers money from reserves to share capital and issues free extra shares to the shareholders (the value of the company remains the same, and the total market value of… …   Dictionary of banking and finance

  • bonus issue — noun Brit. an issue of additional shares to shareholders instead of a dividend …   English new terms dictionary

  • bonus issue — See: scrip issue …   Accounting dictionary

  • bonus shares — bonus issue Shares issued to the existing shareholders of a company following a scrip issue The number of shares received depends on the level of the shareholding prior to the bonus issue. The number of bonus shares is usually one share for a… …   Big dictionary of business and management

  • Issue — A particular financial asset. The New York Times Financial Glossary * * * ▪ I. issue is‧sue 1 [ˈɪʆuː, ˈɪsjuː ǁ ˈɪʆuː] verb [transitive] 1. to officially give something such as a document to someone who needs or wants it: issue somebody with… …   Financial and business terms

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