capitalization issue


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Bonus Issue

The free distribution of new shares to existing shareholders. A bonus issue is most common when the issuer does not wish to increase its dividend when it is expected to do so, especially when it may be cash poor. Instead of the increased dividend, shareholders receive the additional shares. Shareholders receive the bonus issue in proportion to the number of shares they already own. A bonus issue is also called a scrip issue. See also: Antidilution Provision.

capitalization issue

or

scrip issue

, the issue by a JOINT-STOCK COMPANY of additional SHARES to existing SHAREHOLDERS without any further payment being required. Capitalization issues are usually made when a company has ploughed back profits over several years and so has accumulated substantial RESERVES, or has revalued its fixed assets and accumulated capital reserves. If the company wishes to capitalize the reserves it can do so by creating extra shares to match the reserves, and issue them as BONUS SHARES to existing shareholders in proportion to their existing shareholdings. In the USA the term stock dividend is used to describe this same process. See also RETAINED PROFIT.

capitalization issue

or

scrip issue

the issue by a JOINT-STOCK COMPANY of additional SHARES to existing SHAREHOLDERS without any further payment being required. Capitalization issues are usually made where a company has ploughed back profits over several years, so accumulating substantial RESERVES, or has revalued its fixed assets and accumulated capital reserves. If the company wishes to capitalize the reserves, it can do so by creating extra shares to match the reserves and issue them as BONUS SHARES to existing shareholders in proportion to their existing shareholdings. See also RETAINED PROFIT.
References in periodicals archive ?
As much as we would all like to believe that this regulation will put an end to controversy in this area, our collective experiences in dealing with capitalization issues suggests this may be overly optimistic.
TEI also commended Treasury for its efforts to provide timely and administrable guidance, citing the government's response to the September 11 attacks, the re-proposed research credit regulations, the notice on capitalization issues, and, most recently, the notice on the Rite Aid decision (dealing with the loss disallowance rules).
Indeed, the National Taxpayer Advocate identified capitalization issues as the most litigated issue for business taxpayers in the 1998 Report to Congress, and there is no sign the controversy has abated.
Further, a government-favorable resolution of this issue could encourage the IRS to pursue other capitalization issues.
Today, we are busy analyzing a new set of R&D credit rules that, while far from perfect, are more reasonable and grounded in reality, and we are studying a framework for comprehensive guidance on capitalization issues that hold the promise of moderating the drain those issues have been on both IRS and taxpayer resources.
Therefore, a feasibility analysis should also consider certain ownership and capitalization issues.
Eric has assisted clients in a wide variety of situations and has directed numerous assignments, including: the sale of distressed technology assets; debt and equity financing transactions; the development of strategic restructuring alternatives; preparation, critique and negotiation of business plans and plans of reorganization; and crisis advisory and various capitalization issues.
The Institute also commended the Treasury Department for the recent advanced notice of proposed rulemaking on capitalization issues.
The Notice acknowledges that the scope of controversies over capitalization issues has increased in the wake of the decision in INDOPCO v.
He noted that the department is also working on ways providing bright-line guidance on capitalization issues.
Many of these public companies must contend with shareholder demands and market capitalization issues that press the need for continued growth and enhancement of earnings per share.
According to the document, the proposal attempts to "set forth an administrable and practical framework for addressing capitalization issues by providing objective principles that draw lines between capital expenditures and deductible expenses.