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Issuing and Transferring Shares

Issuing Bonus Shares Templates

A bonus issue of shares (also called a capitalisation or scrip issue) is an issue of new shares to existing shareholders in proportion to their current holdings. Instead of paying out profits as cash dividends, the company uses its reserves to pay up additional shares that are then issued to shareholders.

This section brings together a practical guidance note and supporting board and shareholder documents to help you document a bonus issue properly.

When to Use These Templates

Best for:

  • Rewarding existing shareholders without paying a cash dividend.
  • Tidying or restructuring the company’s share capital.
  • Capitalising undistributed profits or reserves.

What This Section Covers

  • What bonus shares are and why companies use them.
  • The procedure and typical approvals required for a bonus or capitalisation issue.
  • Board minutes for approving a bonus issue, with or without shareholder approval.
  • A shareholders’ ordinary resolution to approve a bonus or capitalisation issue where needed.

We have not considered any tax or accounting implications. You should consider taking independent legal, tax and accounting advice before proceeding.

🔀 Document Toolkit: Typical Sequence (may vary)

Step 1 - Understand the process

Start with the Guidance Note - Bonus Shares.

This explains what bonus shares are, reasons for using them, and the procedure for implementing a bonus or capitalisation issue.

Step 2 - Board approval where shareholder consent is not required

If the directors can approve the bonus issue without shareholder approval (for example, where the articles allow it and any other requirements are satisfied), use:

Step 3 - Board Minutes - Bonus or Capitalisation Issue

These minutes record the directors declaring and resolving to implement the bonus issue.

Step 4 - Board and shareholder approvals where member consent is required

If shareholder approval is needed, use both of the following:

Issuing Bonus Shares Templates is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.

Frequently Asked Questions

What is a bonus issue and why would our company do one? +
A bonus issue creates new shares for existing shareholders in proportion to what they already hold, paid up from the company's reserves instead of new money. Nobody's percentage changes and no cash moves. Companies use it to capitalise accumulated profits, tidy a share capital that no longer reflects the business's scale or reward shareholders without paying a cash dividend. The guidance note here explains the mechanics and when they help.
What approvals do we need for a bonus issue? +
Check the articles first: they must permit capitalising reserves, the model articles do, and they dictate whether the board can act alone or needs an ordinary resolution of shareholders. Then the board approves the capitalisation and allotment, the register of members is updated and form SH01 with its statement of capital goes to Companies House within one month, as for any allotment. This sub-folder includes board minutes for both routes and the shareholders' ordinary resolution.
Which reserves can we use to pay up bonus shares? +
Distributable profits can always fund a bonus issue, and certain non-distributable reserves, such as the share premium account, can also be applied in paying up bonus shares, one of the few uses allowed for them. The company's latest accounts should evidence the reserves being capitalised. Take accounting advice on which reserve to use, the choice has accounting and tax consequences the templates deliberately do not decide for you.
Does a bonus issue count as income for our shareholders? +
Treat that as a question for your accountant before the board approves the issue: this collection deliberately excludes tax advice. The treatment depends on the type of shares issued and each shareholder's position, and bonus issues of redeemable shares have their own specific rules. Ask your accountant to confirm the position for the company and for each class of shareholder, and keep that confirmation with the board minutes approving the issue.
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