Bonus Issue. Event in which security holders are awarded additional assets free of payment from the issuer in proportion to their holding. These may be from current profits or may be from accumulated reserves of the company.
There are different taxation rules for the Bonus Issue compared to the Dividend. There could also be a difference in the ranking of the shares that are given, to what the holder already holds. Always announce the event on the ones that they hold, and based on the holding they are given additional shares. They may be of a different ranking. Bonus Issues increase the capital base but not the capital value of the company, since all they are doing is diluting the share capital. Difference from Dividend: Increases holding of shareholder. Other similar terms: Awards; Also see difference between Dividend and Bonus. Dividend is from current profits and bonus may be from accumulated reserves of the company. Separate this into 2 terms.
We have: Capitalisation Issue Bonus rights Issue Original SWIFT definition - stripped out synonyms for the formal definition above: "Attribution Gratuite (FR); Scrip Issue (GB); Capitalisation Issue. Security holders are awarded additional assets free of payment from the issuer in priportion to their holding."
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