| an issue of free shares distributed pro rata to existing stockholders instead of a dividend. |
| bonus issue n. See scrip issue. |
| scrip issue n. An issue of shares made by a company free of charge to existing shareholders. Also called bonus issue. |
Bonus Issue
An offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout. Also known as a "scrip issue" or "capitalization issue".
Investopedia Commentary
New shares are issued to shareholders in proportion to their holdings. For example, the company may give one bonus share for every five shares held.
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See also: Dividend, Hot Issue, Junior (Issue), Shareholder, Stock