Bonus Issue

From Open Risk Manual


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 - strippoed 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." More 25 May A scrip issue is the issue of new shares at no charge pro rata to the holder of existing shares. This means the term Scrip Issue is as modeled here "no charge". But Capitalization becomes close to this in definition. More detail May 25: No change to the par value of the share so why would there be a change inthe capitaliation? Because from an accountingf point of view they change the value of overall capital of the company - they don't change the market value of the conpany but the accountants will record an increase in the issued capital of the company. This is the disctinction between nominal capital and the market capital. Nominal - there is more nominal share value.


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