- 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 issue would mean that a shareholder would receive one free share for every four existing shares they own in the company. The impact of a bonus issue is to reduce the share price, since the same total market capitalisation is being spread over a larger number of shares. This may have a beneficial impact in terms of liquidity of trading. Dresdner Kleinwort Wasserstein financial glossary————(Also scrip issue / capitalisation issue) Euroclear Clearing and Settlement glossarySecurity 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 change. Holders may be offered choice of form. Euroclear Clearing and Settlement glossary————See capitalisation issue Exchange Handbook Glossary————A free issue of extra shares to shareholders by a company. This is often done when the share price has risen so high that they become too expensive to buy for the smaller investors. This is also known as a 'scrip' or 'capitalisation' issue. Financial Services Glossary————The issue by a company of new shares which do not require any payment to be made by the shareholder. This has the effect of making the company's shares more marketable because of the increased number available and the lower market price. London Stock Exchange Glossary
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When a company transfers money from its reserves to its permanent capital it makes a free issue of shares to shareholders. These new shares are then distributed to the existing holders in proportion to their existing holdings. Also known as capitalization issue, a free issue and a scrip issue.* * *
bonus issue UK US noun [C] FINANCE, STOCK MARKET► an occasion when a company changes its profits into shares and gives these shares to shareholders. Those people then own more shares but each share is worth less than before and therefore can be bought and sold more easily: »Investors approved a four-for-one bonus issue.
Financial and business terms. 2012.
