Also known as: dividenda · dividends · distribution · share
Written by attorneys · grounded in primary & secondary sources — see below
A distribution of a corporation's earnings or profits to its shareholders in proportion to their ownership interests, typically declared at the discretion of the board of directors out of current or retained earnings.
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Destiny Davis and Dominic Drake, as sole shareholders of Davenport Pharmaceuticals, met to discuss a large dividend. The board later declared the dividend from retained earnings and distributed it pro rata. Because the payment was a lawful corporate distribution, each shareholder received cash in proportion to ownership.
Danielle Dixon consulted two lawyers not in the same firm about whether a proposed dividend distribution complied with state law. The lawyers agreed to divide their fee after Dixon approved the split in writing. The arrangement satisfied the written client consent requirement for the dividend-related representation.
Dustin Donovan sold a machine to Dorothy Daniels. Donovan knew the machine could cause injury during use in dividend-producing operations. He failed to warn Daniels of the danger, exposing himself to liability for resulting harm.
David Dawson received a dividend from a mutual fund that tracked contraceptive company stock. A state law restricted unmarried individuals from accessing certain fund information tied to the dividend. The restriction violated equal protection by intruding on individual privacy rights regarding the dividend.
Decker Electronics shares paying regular dividends passed to Danielle Dixon by intestate succession after her parent's death. No deed was required for the transfer. Title to the dividend-generating shares vested directly under probate rules.
Dominic Drake received a share of profits from Diamond Manufacturing labeled as a dividend. The payment was not in settlement of a debt or wages. Drake was therefore presumed to be a partner in the business.
The board of directors decides whether to declare a dividend. The decision rests in the board's discretion and is made periodically from current or retained earnings.
Supporting sources
Nonpayment of dividends is one factor courts consider when deciding whether to pierce the corporate veil. It may indicate that the corporation is a mere facade for the dominant shareholder.
A child's dividend income from investments counts as a financial resource of the child. Courts must consider that income when determining the amount of parental support owed.
…The argument relies on Valentine v. Chrestensen, 316 U. S. 52, where the Court held that a city ordinance forbidding street distribution of commercial and business advertising matter did not abridge the First Amendment freedoms, even as applied to a handbill having a commercial message on one side but a protest against…