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The term refers to the reseerves of limited companies which, either because they are not legally distributable or because the company wishes them to be come a permanent part of capital, are given capital status by being allocated to members as bonus shares to rank alongside existing shares. The procedure for this is defined in the Companies Acts.
Reference: The Penguin Business Dictionary, 3rd edt.
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Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >