Law law law

12. What is Dividends?

A payment to the stockholders as returns upon their investment.
Portion of profits of a corporation nan aka set aside muna at I didistribute in a
fixed time sa mga stockholder.

13. Who may declare dividends?

* BOARD OF DIRECTORS- can declare even out of the “unrestricted retained
earnings”
1. Stock Dividends- cannot be issued kapag walang approval ng mga stockholders
na nagrerepresent ng atleast 2/3 nang capital stock
2. Other dividends- kapag majority ng quorum (minimum numbers of voting
members or number of person entitled to attend or vote for the declaration to be
transacted validly) of the board of directors pwede na mag declare ng dividends.

14. Conditions that must be present to declare dividends?

-Dividend declaration is a discretion of the BOD. It is the BOD who will decide on
whether or not a dividend declaration will be made. For regulatory purposes, the
SEC requires submission of dividend declaration for further processing and would
require certain documentary requirements.
- whether cash, property or stock, shall be declared out of unrestricted retained
earnings of the corporation. A corp. cannot declare dividends when it has zero or
negative retained earnings known as retained earnings deficit.

15. CAN THE BOARD BE COMPELLED TO DECLARE DIVIDENDS EVERY

YEAR?
As a general rule, the declaration of dividends is a business judgment which is
lodged in the governing board. By way of exception, the articles of incorporation
may provide that such declaration is required every year.
It may also happen that the corporation's unrestricted retained earnings would
exceed 100% of its paid-in capital stock every year. In such a case, each year this
happens, the board may be compelled to so declared except:

[a] When justified by definite corporate expansion projects or programs approved

by the board of directors; or
[b] When the corporation is prohibited under any loan agreement with any
financial institution or creditor, whether local or foreign, from declaring dividends
without its/his consent, and such consent has not yet been secured; or
[c] When it can be clearly shown that such retention is necessary under special
circumstances obtaining in the corporation, such as when there is need for special
reserve for probable contingencies