Bonus Issue

Tax Glossary Definition

Bonus Issue

Bonus Issue – A bonus issue, also called a scrip issue or capitalization issue, occurs when a company converts its accumulated reserves into share capital and distributes additional shares to existing shareholders at no cost. This increases the total number of shares in circulation but does not alter the company’s overall net worth. Example: If a company announces a 1:1 bonus issue, each shareholder receives one extra share for every share already held.

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