A bonus issue — also called a scrip or capitalisation issue — gives holders extra fully paid shares for free, in proportion to what they already own. The par value of each share does not change. Reserves are moved into share capital, so paid-up capital rises by the nominal value of the new line.
Fractions are the operational headache. A 1-for-3 bonus on a holding that is not a multiple of three leaves a stub. Some issuers, famously in the Telefónica 1-for-10 style, instead grant bonus rights that can be sold, so the stub becomes cash rather than a rounded-away share.
The market price drops in line with the extra shares. Book cost per share is diluted; total book cost of the holding is unchanged.
Atlantic Horizon UCITS ICAV holds Thames Industrial plc in CREST through State Street. A 2-for-5 bonus on that line is mandatory: nobody is asked, CREST transforms open bargains, and Dublin has to rewrite quantity and price before NAV is released. Nippon Industrials KK can run the same capitalisation in Tokyo; JASDEC will credit the new shares on the local effective date, not on Thames Industrial’s CREST night.
Do not confuse a bonus with a scrip dividend. A bonus is a capitalisation. There is no cash alternative and no election. Treating it as optional is how a position is left unadjusted through the ex-date, and how incoming dealers in Dublin buy cheap exposure to a name that just issued free stock.
The Irish administrator cannot outsource that rewrite. Final NAV on the ICAV stays in Dublin, and the ICAV’s own shareholder register stays in Dublin, even though the bonus itself is an issuer event on Thames Industrial or Nippon Industrials. Custody confirms the credit. Dublin still has to deal the fund on the new basis the same morning.
The Cayman sleeve of the same house takes the same ratio. What changes is the valuation sign-off, not the mathematics. A 2-for-5 on 100,000 shares is 40,000 new shares in both books. If one book posts overnight and the other waits for a depot statement, the two sleeves of one sponsor will disagree on the same ISIN.