Future-Proofing Liquidity

The Role of Script Dividends in Corporate Greece

In today’s evolving Greek financial environment – where access to liquidity remains a key concern for many companies and capital efficiency is essential for competitiveness – corporate finance teams are increasingly exploring alternatives to traditional shareholder remuneration models. One such approach gaining renewed interest is the script dividend: the distribution of dividends not in cash but in the form of newly issued shares.

For Greek companies, especially those listed on the Athens Exchange Group or operating in sectors with high capital needs, the script dividend offers a pragmatic and forward-thinking solution. It enables shareholders to choose between receiving dividends in cash or reinvesting them through new equity. At the same time, the company preserves liquidity – an especially critical factor in an economy where credit access may still be limited, and treasury management must balance operational resilience with long-term growth plans.

The adoption of script dividends can be particularly valuable for Greek firms undergoing transformation, facing high investment requirements, or navigating periods of volatility such as energy transition projects, digital infrastructure upgrades, or public-private partnerships. Rather than distributing profits in the form of cash outflows, companies retain capital within the business, strengthening liquidity metrics, supporting reinvestment, and limiting leverage growth.

Several Greek-listed firms in the past have explored stock dividend strategies to navigate turbulent financial cycles or to optimise cash flows amid regulatory or tax-related constraints. Moreover, mid-size enterprises that are preparing for international expansion or looking to invest in innovation often find this model advantageous, as it enhances internal financing flexibility without halting shareholder returns.

Careful planning, clear communication

In one recent example, a company undergoing sectoral repositioning offered shareholders the option to receive their dividend in shares. The majority chose to reinvest, enabling the firm to retain a significant cash buffer that was later used for green CapEx projects and working capital stabilisation amid geopolitical uncertainty. The treasury team viewed the outcome as a success, as it ensured alignment with long-term shareholder interests while improving liquidity without resorting to external financing.

For Greek businesses, however, successful implementation of a script dividend requires careful planning and clear communication. The tax implications for Greek and foreign shareholders must be analysed in accordance with local tax legislation, while potential dilution should be transparently addressed. Investor relations teams need to proactively inform stakeholders – particularly retail investors, who make up a substantial part of the Greek shareholder base – on the structure and strategic rationale behind the offer.

Furthermore, script dividends may offer advantages from an ESG perspective. Companies can demonstrate financial discipline, long-term thinking, and capital stewardship, all of which align with the rising expectations of institutional investors and ESG rating agencies active in the Greek market.

In conclusion, while not yet widely adopted in Greece, the script dividend model has the potential to become an important treasury and shareholder engagement tool. It enables Greek corporates to balance liquidity preservation with shareholder value, and to adapt to a changing financial landscape where internal resources and strategic flexibility are more important than ever.

As Greece continues to attract investment, and corporate governance standards evolve, the ability to deploy innovative tools such as  the script dividend may prove essential to achieving both operational and market success.