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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
capitalization issue
orscrip 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.Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
capitalization issue
orscrip 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.Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005