It is a financial instrument representing the holders
interest in the ownership of either an asset or a pool of
assets. Stocks, Shares, Units etc are different names of
the principally the same instrument. These instruments are
generally freely transferable and that creates a market,
the stock market, where these get exchanged between willing
buyers & sellers.
A company issues a share script when it wants to raise
capital or give a bonus to its shareholders. The share
script is issued to shareholders on a pro rata basis of the
amount of shares currently held. Therefore essentially more
shares are generated, but you get nowt for nothing. The
face value of the existing shares is reduced. The
shareholder does not loose out though as the total value of
the increased number of shares held is the same as before.
The script share is useful for a company where its share
value is very high and therefore puts small investors off.
The company could therefore double its shares issued by a
script issue which would halve the value.
At the end of the day this is a balance sheet exercise as
the company has to find the money from somewhere and may
just juggle with the retained earnings account.
When a Company offers a Scrip Dividend, it issues new shares to shareholders instead of paying a Cash Dividend, if a shareholder wishes. It is usually up to the shareholder whether they wish to receive cash or new shares.