Illegal Dividend

外汇网2021-06-19 13:33:57 97

A pidend declared by a corporation that is in violation of its charter and/or of state laws. Should such a pidend be declared, the company's board of directors can be sued by its shareholders and creditors; the company may also face prosecution.

Taobiz explains Illegal Dividend

Many states prohibit pidend payments from the capital surplus account. Dividends are generally paid out of net income or retained earnings. Illegal pidends may significantly weaken the financial position of the company and expose its creditors to a greater degree of risk.

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