Illegal Dividend
Definition of 'Illegal Dividend'A dividend declared by a corporation that is in violation of its charter and/or of state laws. Should such a dividend be declared, the company's board of directors can be sued by its shareholders and creditors; the company may also face prosecution. |
|
Investopedia explains 'Illegal Dividend'Many states prohibit dividend payments from the capital surplus account. Dividends are generally paid out of net income or retained earnings. Illegal dividends may significantly weaken the financial position of the company and expose its creditors to a greater degree of risk. |
Related Definitions
Articles Of Interest
-
The Power Of Dividend Growth
Dividends may not seem exciting, but they can certainly be lucrative. Learn more here! -
Dividend Facts You May Not Know
Discover the issues that complicate these payouts for investors. -
Why Dividends Matter
Seven words that are music to investors' ears? "The dividend check is in the mail." -
How Dividends Work For Investors
Find out how a company can put its profits directly into your hands. -
How And Why Do Companies Pay Dividends?
Explore arguments for and against company dividend policy, and learn how companies determine how much to pay out. -
Investing In REITs Instead Of Property
Learn why this one particular REIT is a better investment than holding physical property in your retirement portfolio. -
Build A Dividend Portfolio That Grows With You
Balance risk and return to produce adequate income despite inflation. -
Is a dividend reduction a signal to sell?
Although a dividend reduction is generally viewed as a signal to sell, the decision is not as clear-cut as if the dividend were to be eliminated altogether, which would be an unequivocal sell ... -
How To Play Dividends During The Fiscal Cliff
Shifting to qualified investment vehicles and other viable investment strategies could help invstors defer, avoid or minimize the tax hike. -
Introduction To Dividends
Investing in dividend-paying stocks can be an effective method of building long-term wealth.
Free Annual Reports