Company Law Solutions provides first-class help and guidance to companies looking to issue bonus shares in order to reward employee loyalty, convert profit into capital, strengthen the balance sheet, or increase the number of issued shares in preparation for further investment. Issuing bonus shares is a means of increasing the number of shares held by existing shareholders without requiring them to invest further money into the company.
Whatever the reason for doing so, our team of experienced corporate law experts can help your company issue bonus shares quickly and in accordance with all of the statutory rules for doing so. Contact us today to learn more about our services relating the creation and issuance of bonus shares.
What Are Bonus Shares?
Bonus shares are additional shares given to existing shareholders and which are paid for by the company out of its accumulated profits, rather than being issued in return for investment made by the shareholder. This can be done for a variety of reasons, including to reward employee shareholders' loyalty, to strengthen the company's balance sheet, or to lessen the impact of shares being issued to outside investors on existing shareholders' equity.
Impact of Bonus Shares on Company Valuation and Share Price
Issuing bonus shares does not change the total value of a company, but - assuming the shares being issued are ordinary in nature - does reduce the voting power, right to capital and right to dividend of each individual share (as there will be a greater total number of shares in issue). This enables the company to increase its share capital without diluting the existing members' rights or altering their voting power or ownership of the company relative to one another.
Impact of Issuing Bonus Shares on Shareholders
Bonus shares are usually issued to shareholders pro rata to their existing holding. This means that for every share held, each shareholder will receive one or more additional shares. Bonus shares do not increase a shareholder's overall ownership stake in the company; rather, they dilute the value of each individual share. This means that while one may have more total shares after participating in a bonus issue, each share held will be worth less than it was before, as the value of the company's assets is represented by a greater number of shares. This is often desirable, for example in cases where the´ bonus issue is being conducted so that some of the bonus shares can be given away or sold by the allottees.
Bonus share issues can be tricky and easy to get wrong, especially where a company has a large number of existing shareholders, or multiple classes of shares. We take the hassle out of the process and ensure that everything is done correctly.
We provide everything required to be legally compliant, including:
- minutes of directors' meetings
- notices of shareholders' resolutions
- shareholders' consents to resolutions
- notices for Companies House
- completed official forms for Companies House
- our straightforward, step by step guide to completing the procedures
If required, we can supply share certificates at a small extra cost.
If the company is a ‘single person’ company, with just one director/shareholder, appropriate alternative documentation is provided.
Our charge for most bonus issues is £175 + VAT. However, because every company is different, we need to study the company’s filing history to ensure that there are no complicating factors – for example, some companies’ articles will need to be updated to remove an authorised share capital limit. Please complete our quick quote form below and we will be in touch as soon as possible with a firm, no-obligation quote.
|Bonus shares||From £175.00 + VAT||Quote|
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