North Carolina Clauses Relating to Dividends, Distributions: A Detailed Description When it comes to dividend distribution regulations in North Carolina, several essential clauses shape the framework and legal obligations for businesses. These provisions ensure fair practices and protect the interests of shareholders. Let's explore the main types of clauses relevant to dividends and distributions in North Carolina. 1. NC General Statute § 55-6-36—- Dividend Payments: This statute outlines the general requirements for dividend distributions by North Carolina corporations. It specifies that dividends may only be paid out of the corporation's surplus, earned surplus, or net profits. Additionally, it sets forth the conditions under which dividends can be declared and paid, emphasizing the importance of ensuring the financial stability of the company and preserving the rights of creditors. 2. Preferred Dividend Clauses: Many corporations in North Carolina issue preferred stock that grants specific dividend rights to its holders. These clauses outline the preferences, priorities, and conditions under which dividends are paid to preferred shareholders. This may include fixed or adjustable dividend rates, dividend arbitrages, cumulative dividends, and the redemption of preferred shares. Such clauses provide security to preferred shareholders by prioritizing the distribution of dividends to them before common shareholders. 3. Dividend Restriction Clauses: Certain situations might require corporations to restrict or eliminate dividend distributions temporarily or permanently. For example, during financial distress, a corporation may need to hold back dividends to strengthen its financial position or repay debts. Dividend restriction clauses guide corporations in implementing such measures and define the conditions under which dividends may be suspended or reduced. 4. Dividend Reinvestment Clauses: Dividend reinvestment plans (Drips) allow shareholders to reinvest their dividends back into the corporation by purchasing additional shares. Dividend reinvestment clauses outline the terms and conditions of such plans, including the process for opting-in, calculation of reinvestment prices, and any discounts or benefits provided to participants. These clauses encourage long-term investment and provide shareholders with an opportunity to compound their holdings over time. 5. Anti-Dilution Clauses: Anti-dilution clauses protect shareholders from potential dilution of their ownership and dividend rights. These clauses may apply in situations such as stock splits, stock dividends, or the issuance of additional shares at a lower price. By adjusting the dividend rate or number of shares held by shareholders, anti-dilution clauses ensure that their proportional ownership remains intact, maintaining their dividend entitlements. 6. Dividend Payment Timing Clauses: Dividend payment timing clauses outline the frequency and timing of dividend distributions. They specify dividend declaration dates, record dates (cut-off dates for determining eligible shareholders), and payment dates. These clauses ensure transparency and clarity regarding when dividends will be distributed, enabling shareholders to plan their investments accordingly. It is crucial for businesses, shareholders, and legal advisors in North Carolina to understand these clauses and comply with the applicable rules and regulations. Adhering to these provisions ensures fair treatment, protects the rights of shareholders, and promotes a stable and thriving business environment in the state.
North Carolina Clauses Relating to Dividends, Distributions
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A shareholder can obtain an injunction compelling payment of a reasonable dividend where the corporation is withholding dividends in bad faith for a fraudulent or abusive purpose. Once a dividend has been declared by the corporation, it is a debt of the corporation, and shareholders may bring suit to compel payment.
Section 123 (1)(a) of the Companies Act, 2013 provides that no dividend shall be declared or paid by a company for any financial year except out of the profits of the company for that year or out of the profits of the company for any previous financial years arrived at after providing for depreciation in ance ...
1. it has positive net assets before and after the payment (the Net Assets Test) 2. the dividend is fair and reasonable to the company's shareholders as a whole, and 3. the dividend does not materially prejudice the company's ability to pay its creditors.
The company makes a provision for the dividend payable. It means it has made short-term fund arrangements to manage the actual dividend payment post-approval. This article explores key information about the proposed dividend to help you understand its relevance for a company and its shareholders.
Dividend to be paid by cheque or warrant Section 123(5) of the Companies Act, 2013 provides that the dividend payable in cash may be paid either by cheque or warrant or in any electronic mode to the shareholder entitled to the payment of dividend.
The Board may declare interim dividend out of profits. The amount of dividend shall be deposited in a scheduled bank in separate account within five days. Dividend may be paid by cheque or warrant or in any electronic mode to the shareholders entitled to the payment of dividend.
(1) The company may by ordinary resolution declare dividends, and the directors may decide to pay interim dividends. (2) A dividend must not be declared unless the directors have made a recommendation as to its amount. Such a dividend must not exceed the amount recommended by the directors.
There are four types of dividend policy. First is a regular dividend policy, the second is an irregular dividend policy, the third is a stable dividend policy, and lastly no dividend policy.
The company announces when the dividend will be paid, the amount and the ex-dividend date. Investors must have bought the stock at least two days before the official date of a dividend payment (the "date of record") in order to receive that payment.
The Companies Act, 2013 lays down certain provisions for declaration of dividend, which are: (i) Section 51 permits companies to pay dividends proportionately, i.e. in proportion to the amount paid-up on each share when all shares are not uniformally paid up, i.e. pro rata.