Part 23Company distributions
Chapter 3Matters which are not distributions
Stock dividends
1051“Bonus share capital” and “in lieu of a cash dividend”
1
In sections 1049 and 1050 “bonus share capital” means—
a
share capital issued otherwise than wholly for new consideration, or
b
the part (if there is such a part) of any share capital so issued that is not properly referable to new consideration.
2
For the purposes of section 1049(1)(a) share capital is issued by a company in lieu of a cash dividend if—
a
it is issued in consequence of the exercise by a person of an option conferred on the person, and
b
that option is an option to receive, in respect of shares in the company, either a dividend in cash or additional share capital.
3
For the purposes of subsection (2), an option to receive either a dividend in cash or additional share capital is conferred on a person not only—
a
if the person is required to choose one or the other, but also
b
if the person is offered the one subject to a right, however expressed, to choose the other instead.
4
The reference in subsection (2) to a person's exercise of an option includes a person's abandonment of, or failure to exercise, a right such as is mentioned in subsection (3)(b).