- In the context of a corporation, scrip is evidence of the right to obtain ownership of a portion of the corporation’s shares. However, this is not a basis for ownership of the shares. This is one of the alternatives used by corporations that decide not to issue fractional shares in connection with activities such as:
- stock dividend
- separation or consolidation of shares
- merging (amalgamation).
The Corporation may issue scrip certificates to replace fractional shares and permit the exchange of certificates for full share certificates after the holder collects enough scrip certificates to equal one full share. Script certificates are transferable and investors can purchase script certificates from multiple sources to collect the full share.