Your broker will
inform you of any scrip issue – also known
as bonus or capitalization issue – affecting
your holding. A scrip issue is designed to increase
the marketability of a company’s shares
by reducing the share price without compromising
aggregate value. It takes the form of an issue
of free shares, and there is an accompanying technical
change to the company’s balance sheet.
After a scrip issue, liquidity of the shares should
improve, and you will have more shares but at
a proportionately lower share price. The overall
value of your holding – unlike after a rights
issue – will be the same. In practice, it
may rise a little because there is a psychological
value attached to having a larger number of shares
for the same money.
