How do stock dividends differ from cash dividends?

A stock dividend pays the profit dividend in newly issued shares instead of cash; it requires a resolution of the general meeting of shareholders, and the shares are distributed at par value.

Under the Commercial Act, stock dividends may not exceed one-half of the total profit dividend, but under a special provision of the FSCMA, stock-listed corporations may pay up to the full amount of the total profit dividend in shares if the market price is at or above par value. Shareholders who receive a stock dividend become shareholders of the new shares when that general meeting of shareholders ends.