Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Scrip dividend definition

What does Scrip dividend mean? A scrip dividend is where a company offers shareholders fully paid new shares instead of, or as an alternative to, a cash dividend. It is a descriptive term, not defined in statute or case law, and its use is consistent across England & Wales, Scotland, Northern Ireland and Ireland. Key features include: shareholder election; pro rata issue using a stated scrip price/ratio; cash to non-electing holders; and potential dilution. Companies use scrip dividends to preserve cash and manage capital. Implementation typically requires directors’ authority to allot and, where structured as a capitalisation, power to capitalise reserves; consistency with the articles; board...

UK scrip dividends: CA 2006 framework, structure, LR/DTR/AIM compliance, LSE timetable and post-issue steps

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Practice notes

A company is generally understood to possess an implied authority to share its profits with its members, save where its articles of association state otherwise. A dividend constitutes one category of distribution that a company may make to its members; in practice, dividends are the distribution most frequently paid by companies. Any distribution must satisfy the requirements of Part 23 of the Companies Act 2006 (CA 2006), together with the applicable common law principles on distributions as adapted by that Part, if it is to be lawful. For an exploration of the legal framework and practical aspects of company distributions, see Practice Note: Distributions. For guidance on the ramifications of breaching the law on distributions, see Practice Note: Unlawful distributions. In ordinary usage, a ‘dividend’ means a portion of profits, whether at a fixed percentage or otherwise, apportioned to the holders of a company’s shares. The term is used for payments made to shareholders in their capacity as shareholders and not, for example, as remuneration for services...

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Web page updated on 22/05/2026

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