Bonus issues of shares, also known as scrip issues or capitalisation issues, are a popular method for UK companies to restructure their share capital and reward shareholders without raising new funds. Whether you are a director seeking to optimise your company’s capital structure, or a shareholder interested in understanding your rights, obtaining specialist legal advice ensures the process is smooth, compliant, and beneficial for all parties involved. The Law Firm Group’s experienced solicitors guide clients through every stage of a bonus issue of shares, providing clarity and peace of mind from start to finish.
What Is a Bonus Issue of Shares?
A bonus issue of shares involves a company issuing new shares to existing shareholders, free of charge, in proportion to their current holdings. This process converts part of the company’s reserves—such as retained earnings or share premium—into share capital. Unlike a rights issue, no new capital is raised from shareholders; instead, it is a way of rewarding investors and strengthening the company’s balance sheet.
Bonus issues are common in the UK for private limited companies and public companies alike. They are often used to reflect growth in the company’s reserves, to bring the issued share capital in line with the company’s valuation, or to increase the marketability of shares. However, executing a bonus issue requires careful adherence to legal requirements and proper documentation, which is why expert legal services are essential.
When Might You Need a Bonus Issue of Shares?
Directors and company secretaries may consider a bonus issue of shares in various circumstances, including:
- Restructuring share capital to better reflect the company’s financial position
- Rewarding loyal shareholders without diluting ownership
- Simplifying future dividend payments by increasing shareholdings
- Complying with investor agreements or preparing for future funding rounds
- Adjusting share values for accounting or tax planning reasons
Regardless of the motivation, the process must be managed with precision to avoid complications or disputes. The Law Firm Group’s UK solicitors are well-versed in all aspects of company law, ensuring your bonus issue is legally sound and efficiently executed.
The Legal Process: Step by Step
1. Assessing Eligibility and Planning
The process begins with an assessment of your company’s articles of association and statutory records to determine whether a bonus issue is permitted and what approvals are required. The Law Firm Group’s solicitors will review your company’s constitution and advise on any necessary amendments or shareholder consents.
2. Board and Shareholder Approvals
Typically, the directors must propose the bonus issue at a board meeting, and in many cases, shareholder approval is also required. Our legal team drafts all necessary resolutions, notices, and minutes, ensuring full compliance with the Companies Act 2006 and your specific articles of association.
3. Allotment and Documentation
Once approvals are in place, the new shares are allotted to existing shareholders according to the agreed ratio. The Law Firm Group will prepare the relevant allotment forms, update the company’s statutory registers, and issue new share certificates, ensuring every detail is correct and properly recorded.
4. Companies House Filings
After the bonus issue is completed, certain filings must be made with Companies House, including the submission of form SH01 and updates to the company’s statement of capital. Our solicitors handle these filings promptly and accurately, minimising any risk of penalties or administrative errors.
5. Ongoing Support and Advice
Following the bonus issue, questions may arise around the impact on voting rights, future dividends, or tax implications. The Law Firm Group offers ongoing support and clear legal advice, keeping you informed and confident in your company’s corporate structure.
Common Issues and How We Help
Carrying out a bonus issue of shares without legal guidance can lead to costly mistakes. Common challenges include misinterpretation of the company’s constitutional documents, errors in calculating entitlements, failure to meet statutory deadlines, or overlooking tax considerations. Our specialist solicitors anticipate and resolve these issues before they arise, safeguarding your interests and ensuring full compliance at every stage.
We also provide expert legal advice on associated matters such as updating the company’s share register, managing shareholder communications, and ensuring directors fulfil their fiduciary duties. With The Law Firm Group, you can expect a comprehensive, proactive approach to your legal needs.
The Benefits of Working with The Law Firm Group
Choosing The Law Firm Group for your bonus issue of shares offers a range of clear benefits:
- Clarity: We explain every step in plain English, so you always know what’s happening and why.
- Protection: Our solicitors ensure the process is legally robust, protecting directors and shareholders from future disputes or regulatory issues.
- Peace of Mind: With our expert guidance, you can be confident your bonus issue is handled efficiently and correctly.
- Efficiency: We manage all documentation, approvals, and filings, saving you time and reducing administrative burden.
- Transparent Costs: Our legal services are delivered with clear pricing, agreed in advance—no hidden fees or surprises.
- Ongoing Support: We remain available for follow-up questions, further advice, or future company law matters.
Getting Started with The Law Firm Group
Engaging The Law Firm Group for a bonus issue of shares is straightforward. Our process typically begins with an initial consultation, where we discuss your objectives and review your company’s current structure and documentation. Our UK solicitors will identify any legal or procedural considerations unique to your circumstances, ensuring the process is tailored to your needs.
Once you decide to proceed, we will draft all necessary documents, advise on the required approvals, and manage the complete legal process from start to finish. Throughout, you will benefit from prompt communication, practical advice, and the reassurance that your company is in safe hands. Should you require support with other corporate legal services in the future, The Law Firm Group’s specialist solicitors are always ready to assist.
If you are considering a bonus issue of shares or require expert legal advice on company share capital matters, The Law Firm Group offers the experience and professionalism you can trust to achieve your goals with confidence and efficiency.
