Answer Posted / sukanya
A share split is similar to a scrip issue. A scrip issue
(also called a capitalisation issue or a bonus issue) is the
issue of new shares to existing shareholders at no charge,
pro rata to their existing shareholdings. Shareholders are
issued with new shares are no cost, but its effect on the
balance sheet is different from that of a bonus issue.
A split reduces the par value of each share, but increases
the number of shares by the same proportion. For example, if
the par value of shares is reduced from 10p to 5p, then the
number of shares will be doubled, and each shareholder will
receive two shares to replace each one they currently own.
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