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Short Note
Explain the following term/concept:
Capitalisation of Reserves
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Solution
(1) The process of issuing the bonus shares out of the company's profits or reserves is known as "Capitalisation of Profits or Reserves.
(2) It is a reward to shareholders, distributed in proportion to the number of shares each owns. The process has no impact on a corporation book value.
Concept: Precautions to Be Taken by the Secretary While Corresponding with Members
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Chapter 6: Correspondence with Members - Exercises [Page 103]
