scrip
Scrip is a certificate or paper (or its electronic version) proving you own shares, or extra shares a company gives you instead of cash dividends.
In plain English
Every Nigerian who has ever collected a dividend cheque from a company and calmly wished it had come as more shares instead has already brushed against the idea behind scrip, even without knowing the word for it.
Scrip simply means a document that proves ownership, usually of shares. In the old days it was literal paper, the kind your uncle kept in a file with his other important documents, sometimes for a company like UACN or First Bank. Today most of that has moved to electronic records held by the Central Securities Clearing System, but the idea has not changed. The certificate, physical or digital, is your proof that you own a slice of the company.
There is also a second meaning that trips people up, and it is the more interesting one. Some companies offer a scrip dividend, which means instead of paying you cash, they give you more shares of the same value. So if a company declares a dividend of ₦2 per share and you hold 1,000 shares, instead of ₦2,000 landing in your account, you might receive shares worth ₦2,000 added to your holding.
This matters for a Nigerian professional in Manchester who still owns shares in a Lagos listed company through a local stockbroker. If that company runs a scrip dividend option, the choice between cash now or more shares later becomes a small but real decision, especially if the naira is doing something unpredictable and reinvesting locally feels safer than converting cash across currencies.
Companies like scrip dividends because they conserve cash while still rewarding shareholders. Shareholders sometimes like it too, because more shares mean a bigger future stake, if the company keeps growing.
The lesson sitting calmly inside this old fashioned word is that ownership does not always have to be paid out. Sometimes it simply grows.
Chidinma owns 2,000 shares in a company trading at ₦15 per share. The company announces a scrip dividend equivalent to ₦1 per share instead of a cash payout. Rather than receiving ₦2,000 in cash, she receives about 133 new shares, based on the share price, added directly to her holding.
Questions people ask
Is scrip the same as a share certificate?
Almost. Scrip is the general word for a document proving ownership, and a share certificate is the most common form of it. These days both often exist as electronic records rather than physical paper.
Why would a company choose to pay a scrip dividend instead of cash?
It helps the company keep more cash in the business for operations or expansion, while still rewarding shareholders with something of value, in this case additional shares.
If I receive a scrip dividend, do I still pay tax on it?
In Nigeria, dividends, whether cash or scrip, are generally subject to withholding tax, so it is worth checking with your stockbroker or a tax adviser how the value of the shares you received is treated.
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