Published on 24 April 2023

Corporate actions: focus on the dividend payment in shares

In the current economic context, many companies offer their shareholders to opt for their dividend payment in shares.

This operation allows the issuer to increase its equity capital and save cash. The liquidity of the share is also strengthened due to the circulation of new shares.

This mechanism is also very popular with individual shareholders and investment managers, especially if a differential is observed between the subscription price and the stock market price. Indeed, companies whose shares are listed on a regulated market have the option of offering a discount on the issue price. This discount can be up to 10% of the average stock market price observed during the 20 trading days preceding the day of the general meeting.

As the payment of the dividend in shares is optional, shareholders still have the option to receive their dividends in cash.  This option will also be the default option in the absence of a response from the shareholder within the deadline.

Hence, the payment of dividend in shares represents benefits for both companies and their shareholders. Prior to its implementation, this payment option must be authorized in the articles of association of the company. Failing that, this operation will have to be validated by an extraordinary or combined general meeting.

Are you considering paying your dividend in shares? Discover Uptevia’s solutions to support you:

Uptevia relies on a team of technical experts to assist you in the customised set up of the transaction. This expertise guarantees the successful execution of your dividend payment in accordance with latest regulations and market practices in force.

Our solutions cover the following services:

  • Determine the overall schedule of the operation.
  • Calculate the issue price including a possible discount.
  • Ensure the role of centralizing agent of the operation with the financial intermediaries holding your value.
  • Carry out regulatory procedures with Euroclear and Euronext for the creation and the listing of your new shares.
  • Deploy a digital solution to collect the choice of your shareholders.