capitalization of reserves - the conversion of retained profits or other reserves into share capital by means of a bonus issue in connection with an increase of the share capital in the company. The capitalisation of reserves leading to a bonus issue does not involve further payment on the shareholders' part. In principle the shareholders should not be better off as a result of the bonus issue since the market price per share might be expected to fall proportionately. In practice the market price may perform differently partly because the issue may have drawn favourable attention to the further prospects of the company., capitalization of reserves - an issue of bonus shares, free of cost and only to existing shareholders, using part of the company's reserves; syn. bonus issue, bonus issue - an issue of shares to existing shareholders from the authorised capital, made possible by the capitalisation of reserves thus increasing the issued capital, aktsiaettevõtte vaba omakapitali suunamine aktsiakapitali täiendamiseks