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The Board of Directors of a listed company have decided that it needs to increase its equity capital to ensure it is in a more stable financial position.
The shareholder profile is a mix of institutional and individual small shareholders.
The board is considering either:
* A scrip dividend
* A zero dividend
Which THREE of the following would be considered disadvantages of a scrip dividend compared to a zero dividend?
A. A scrip dividend results in more shares in issue which will create an expectation for future dividends.
B. A scrip issue may give shareholders the impression that they are receiving something of value.
C. There will be company secretarial and additional administration involved with a scrip dividend.
D. A scrip dividend results in distributable reserves being moved to non-distributable reserves.
E. A scrip dividend will dilute the control of current shareholders.
Answer: A,C,D

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