What is a Bonus Issue (Capitalisation)?
A bonus issue is a free issue of new shares to existing shareholders in proportion to your existing shares. It is usually a mandatory event, which means the event will take place regardless of client participation. Clients do not have to pay for the new shares, so the Company will not raise any new money. This will increase the number of shares clients hold, but it is likely to reduce the market price of each share. Therefore the total value of clients investment will remain largely unchanged. Mandatory Bonus Issues will go onto Mandatory Corporate Action spreadsheet which is available for shareholders online.
Company's will sometimes issue elective Bonus Issues, and these are usually elective as clients can elect to receive the Bonus Issue as Income or Capital, for UK tax purposes. We will aim to notify you of an elective Bonus Issue by letter.