What is stock dividend?

Stock giveaway refers to a way for a company to convert its retained earnings or capital reserves into share capital and distribute them to existing shareholders for free. Stock giveaway does not involve the payment of actual funds by the shareowner, but rather the company converts a portion of the surplus or capital into the shareowner’s stock, thus also known as “red shares”. The main purpose of stock giveaway is to expand the scale of share capital, improve the share capital structure, and enhance the market liquidity of the stock.