Registration of UK Limited Companies!
Information & Guidance!

What are bonus shares?

If authorised by its articles, a company may resolve to use any undistributed profits, or any sum credited to the company’s ‘share premium account’ or ‘capital redemption reserve’ to finance an issue of wholly or partly paid up 'bonus' shares to the members in proportion to their existing holdings. The shareholders to whom the shares are issued pay nothing. Since the issue may reduce the amount of money available for paying dividends, the term 'bonus' is not always appropriate. The correct term is 'capitalisation of reserves' or ‘capitalisation of profits’ but the terms 'scrip -' or ' scrip - issue' are also used to describe such shares.

A company can also use a capitalisation of profits to credit partly paid shares with further amounts to make them paid up.

The allotment of bonus shares must be notified to Companies House on Form 88(2). The amount paid or due on each share is ‘nil’or ‘0.00’ and the shares are shown as paid up ‘otherwise than in cash’.

In addition, if a listed public company issues bonus shares in respect of shares held in treasury, the company must notify Companies House on Form 169(1B). Stamp duty is not payable. No fee is payable to Companies House.

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Source:
http://www.companieshouse.gov.uk/about/gbhtml/gba6.shtml#one

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