Issuing bonus shares - an allotment of "free" shares to existing shareholders out of company profits
What are bonus shares?
Bonus shares are shares allotted to the existing members of the company pro rata with the shares they already hold where the shares are paid for by the company out of its accumulated profits. In other words, instead of paying out the profit as dividends, the money is used to pay for additional shares given to each shareholder.
Procedures for issuing bonus shares
Issuing bonus shares will involve a share allotment and must be recommended by the directors and approved by the shareholders.
If the company has an authorised share capital, the articles may need to be updated to remove the limitation on the number of shares that may be allotted. There can be complications where the company has different classes of shares, in which case there must be careful review of the terms attached to the different classes.
If we required, we can supply share certificates and/or statutory registers as an additional service.
If the company is a single person company, with just one director/shareholder, appropriate alternative documentation is provided.
Most bonus issues will fall within the benchmark price. Increased charges may apply if the articles need to be updated to remove the authorised share capital or there are complications with multiple share classes.