Commentary

D6.240 Stock dividend—definition

Corporate tax
Corporate tax | Commentary

D6.240 Stock dividend—definition

Corporate tax | Commentary

D6.240 Stock dividend—definition

A stock dividend does not fall within the statutory definition of a reorganisation, but is mentioned here for completeness as a transaction involving an issue of share capital.

A stock dividend is an issue of shares by a company resident in the UK made1:

  1.  

    (a)     because a shareholder has exercised an option to take additional share capital as an alternative to a cash dividend (note, a shareholder is treated as exercising an option not only where he makes a positive choice but also where he abandons a right or fails to exercise a right); or

  2.  

    (b)     in respect

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