Bonus Issue

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DEFINITION of '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 EXPLAINS 'Bonus Issue'

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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