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A share capital reduction is another name for this exercise. The effect of a return of capital is to leave the shareholder with cash compensation for ending up with fewer shares than they started with.

It is quite common for issuers to achieve a return of capital by replacing existing shares with a new share issue but, for example, only issuing four shares for every five held before. The shareholder will then receive a fifth ‘B’ share that can be cashed in at a future date.

Returns of capital accounts for 2% of all corporate actions. ^{[20 ]}