Commentary

D6.220 Bonus issue—definition and effect of acquisition

Corporate tax
Corporate tax | Commentary

D6.220 Bonus issue—definition and effect of acquisition

Corporate tax | Commentary

Issue of share capital

D6.220 Bonus issue—definition and effect of acquisition

Generally, a bonus issue falls within the share reorganisation rules (D6.101–D6.103) and should therefore be tax neutral for the shareholders.

Definition of a bonus issue

A bonus issue (or scrip issue) involves:

  1.  

    (a)     new shares being issued for no payment to all existing shareholders (or to holders of specific classes of share) pro rata to their current shareholdings in the issuing company, and

  2.  

    (b)     the shares representing the capitalisation of reserves, or being made as part of a splitting of existing shares into shares of a lower nominal

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