Bonus share
Bonus shares are shares that are issued in the event of nominal capital increases from company funds; In terms of economic effect, the issue of bonus shares corresponds to a share split . Synonyms are bonus share , additional shares or stock dividend . The term bonus share is also used synonymously, even if these are sometimes treated differently under German tax law.
Bonus shares
The issuance of bonus shares is usually justified by the fact that the share is better tradable due to a smaller denomination and the correspondingly lower price - similar to a share split .
Accounting effect
Bonus shares are allocated to the existing shareholders if the subscribed capital of a stock corporation increases through the conversion of reserves . This transaction is neutral with regard to the amount of equity as well as the company shares of the individual shareholders and their value. The legal basis for the issue of entitlement shares is the capital increase from company funds in accordance with Sections 207–220 AktG .
Effect on the stock market price
Increasing the number of shares can cause the share price to decrease. The first listing of the new price will be marked with "ex correction share" or "ex BA" for short. For example, if the subscribed capital increases by 20%, the previous shareholders receive one additional share for every 5 shares.
Stock execution
The capital increase from company funds must be resolved by the general meeting. The resolution is then usually implemented after entry in the commercial register during the second half of the financial year. As a rule, the new shares are fully entitled to dividends or profits and are thus treated as equivalent to the previous shares. With immediate full entitlement to profit, the bonus shares receive the same security identification number - WKN or ISIN . If only a partial entitlement to profit is granted, the bonus shares are considered new shares and receive a different security identification number and are listed separately on the stock exchange during the financial year. This distinction no longer applies after the end of the financial year.
If the number of shares in a shareholder's deposit is not a whole multiple of the conversion ratio , the remaining amount is booked in the form of partial share rights and is usually rounded to the third place after the decimal point . For example, after issuing bonus shares at a ratio of 7: 8, 50 shares become 57.143 shares, i.e. 57 whole shares and a partial right to 0.143 shares. The shareholder may be custodian bank instruct the 0.143 fractional rights to sell or buy additional 0.857 part of rights in order to get back on a whole number of units. Without instruction, the partial rights are best sold after a period of a few weeks .
Tax treatment in Germany
The addition of bonus shares (contrary to the dividends paid) is not subject to income tax. Special features arise when determining the taxable private sales proceeds. The bonus shares are deemed to have been acquired at the time the original shares were purchased. In the event of a sale, the purchase price of the new and old shares is reduced in the exchange ratio. In the example above (ratio 1 to 5), a purchase price of EUR 120 would result in a (tax) purchase price of EUR 100. If the shareholder therefore sells for 130 euros, the taxable profit per share would amount to 30 euros.
Bonus shares
Another variant of bonus shares are bonus shares. These are shares that are issued by a stock corporation or a third party to individual shareholders free of charge (according to certain criteria, e.g. holding period) and that do not come from a capital increase from company funds. This was e.g. This was the case , for example, with the IPO of Deutsche Telekom (then called loyalty shares ).
As an incentive for private investors to hold these securities after the first issue date, one bonus share was granted for every 10 T-shares held for the shares issued from the first IPO in 1996 after a holding period of 3 years. In the following two issues in 1999 and 2000, loyalty shares were also issued after a holding period of one year. The number of eligible loyalty shares from the first IPO was limited to 30 per person; there was no limit to the two subsequent IPOs.
Tax treatment in Germany
According to German tax law, these bonus shares are in accordance with Section 20 (2) No. 1 EStG was taxable as income from capital assets in the assessment period of receipt. According to the administrative opinion, the lowest market value of the T-shares that was traded on a stock exchange on the day the loyalty shares were booked into the securities account is decisive for determining the income, cf. OFD Koblenz dated June 17, 2005 - S 2252/2256 A. For reasons of protection of trust, the bonus shares of the first tranche were not subject to taxation, although taxable income was present, cf. Federal Ministry of Finance of December 10, 1999, Federal Tax Gazette. I 1999, p. 1129.
In terms of income tax, these bonus shares are deemed to have been acquired in Germany at the time the bonus shares were issued; the speculation period for the corresponding portion begins with the deposit credit. (see BMF of October 25, 2004, Federal Tax Gazette I 2004, 1034)
