scrip dividend
Definition
Provisional certificate issued (at the option of individual stock/shareholders) by a firm strapped for cash (but having adequate retained earnings) in lieu of cash dividend. It may take the form of (1) a promissory note discountable before its due date, also called liability dividend, or (2) common stock (ordinary shares) reflecting capitalization of a part of reserves (retained earnings). Also called capitalization issue, it allows the holders to increase the size of their shareholding without incurring associated costs, and the issuing firm to retain cash for expansion.
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scrip dividend is in the Accounting & Auditing, Banking, Commerce & Finance, Investing and Securities & Futures Trading subjects.
scrip dividend appears in the definitions of the following terms: scrip and liability dividend
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