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What is share script?
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Answer Posted / terry medcraft
A company issues a share script when it wants to raise
capital or give a bonus to its shareholders. The share
script is issued to shareholders on a pro rata basis of the
amount of shares currently held. Therefore essentially more
shares are generated, but you get nowt for nothing. The
face value of the existing shares is reduced. The
shareholder does not loose out though as the total value of
the increased number of shares held is the same as before.
The script share is useful for a company where its share
value is very high and therefore puts small investors off.
The company could therefore double its shares issued by a
script issue which would halve the value.
At the end of the day this is a balance sheet exercise as
the company has to find the money from somewhere and may
just juggle with the retained earnings account.
| Is This Answer Correct ? | 21 Yes | 5 No |
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