SCRIP ISSUE Meaning and
Definition
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A scrip issue refers to the process in which a company issues additional shares to its existing shareholders without requiring them to make any additional payments. This type of issue is commonly referred to as a bonus issue or a capitalization issue. The issuance of scrips is often seen as a way for companies to reward their shareholders by increasing the share capital without diluting their ownership stake.
In a scrip issue, the company typically allocates new shares to the existing shareholders in proportion to their existing shareholding. For instance, if a company announces a scrip issue on a ratio of 1:10, it means that shareholders will receive one additional share for every ten shares they already hold. These new shares are usually issued as fully paid shares, meaning that they carry all the rights and benefits of the original shares.
The main purpose behind a scrip issue is to increase the company's share capital and provide additional liquidity to the existing shareholders. This can be advantageous for investors as it enhances the trading capabilities of their existing shares. Furthermore, a scrip issue can improve the company's financial flexibility by increasing its regulatory capital base and strengthening its balance sheet.
Investors often view scrip issues as a positive sign, as they indicate that the company has surplus profits or reserves that it intends to distribute among its shareholders. However, there can be situations where investors may perceive scrip issues as a sign of financial distress or a lack of confidence in the company's growth prospects.
Overall, a scrip issue is an issuance of additional shares to existing shareholders on a pro-rata basis, aiming to reward shareholders and increase the company's share capital without requiring additional cash payments.
Common Misspellings for SCRIP ISSUE
- acrip issue
- zcrip issue
- xcrip issue
- dcrip issue
- ecrip issue
- wcrip issue
- sxrip issue
- svrip issue
- sfrip issue
- sdrip issue
- sceip issue
- scdip issue
- scfip issue
- sctip issue
- sc5ip issue
- sc4ip issue
- scrup issue
- scrjp issue
- scrkp issue
- scrop issue
Etymology of SCRIP ISSUE
The term "scrip issue" has its origins in the Middle English word "script", which was derived from the Late Latin word "scriptum", meaning "something written". In medieval times, "script" referred to a written certificate or document, particularly one with legal or financial significance.
The term "issue" comes from the Old French word "issue", meaning "exit" or "outcome". In English, "issue" evolved to mean a result, a flow or a supply.
When combined, "scrip issue" refers to the issuance or distribution of written certificates or documents, usually as a form of payment or compensation. It is commonly used in financial and legal contexts to describe the act of providing shareholders or employees with certificates that can be redeemed or used in exchange for goods or services.
