The Colonial Motor Company Ltd is distributing $12.6 million to shareholders via a bonus issue to use up tax credits.
Shareholders will receive one new ordinary share for every 5.75 existing shares they hold.
In total, 4.844 million shares will be issued fully paid at a price of $2.60 each from the company's retained earnings on January 18 to shareholders on the register a 5pm on January 11.
The total distribution of $12.59m will carry imputation, or tax, credits of $6.2m, or $1.28 per share.
The company signalled in its annual report that it was looking at ways to use available imputation credits because it had a significant pool of credits at the 33 percent level.
Tax changes on April 1 next year mean dividends will only be imputed to a maximum of 30 percent in future.
