Return of capital definition

Companies sometimes return a portion of capital, or value, to their capital owners. This means an investor like a shareholder will receive back a portion of their original investment.

Return of capital definition

Companies sometimes return a portion of capital, or value, to their capital owners. This means an investor like a shareholder will receive back a portion of their original investment.

The value moves from the company back to the investor. It’s a common practise by mutual funds, master limited partnerships and Real Estate Investment Trusts (REITs). Returns of capital are often treated differently in tax regimes to dividends or other types of income or capital gains payments to shareholders.

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