Capitalisation of profits: converting distributable profits into paid-up capital through issuance of bonus shares to members. Capitalisation of profits is the mechanism by which a company, if permitted by its constitution, applies profits or reserves to pay up unissued shares, debentures or other securities and issues those securities as fully or partly paid to members, thereby transferring the sum capitalised from profit and loss or reserve account to share or loan capital account; such allotments yield bonus shares paid out of divisible profits rather than cash distributions.