Liquidating dividend
Encyclopedia
A liquidating distribution, sometimes called a liquidating dividend, is a type of nondividend distribution made by a corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

 to its stockholders during its partial or complete liquidation
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...

. Like nondividend distributions, they are not paid out of the earnings and profits of the corporation. When a liquidating dividend occurs, it is considered to be a return of capital
Return of capital
Return of capital refers to payments back to "capital owners" that exceed the growth of a business. It should not be confused with return on capital which measures a 'rate of return'....

 and not profit.

See also

  • Dividend cover
    Dividend cover
    Dividend cover is the ratio of company's earnings over the dividend paid to shareholders, calculated as earnings per share divided by the dividend per share...

  • Dividend tax
    Dividend tax
    A dividend tax is an income tax on dividend payments to the stockholders of a company.-Collection:In many jurisdictions, the government requires the company to withhold at least the standard tax, paying this to the national revenue authorities and paying out only the balance to the...

  • Dividend units
    Dividend units
    In finance, a dividend unit is the right to receive payments equal to actual dividends paid on a share or a stock. A dividend unit can be granted for a term, for example 20 years from the date of grant....

  • Dividend yield
    Dividend yield
    The dividend yield or the dividend-price ratio on a company stock is the company's total annual dividend payments divided by its market capitalization, or the dividend per share, divided by the price per share. It is often expressed as a percentage...

  • Special dividend
    Special dividend
    A special dividend is a payment made by a company to its shareholders that the company declares to be separate from the typical recurring dividend cycle, if any, for the company. Usually when a company raises its normal dividend, the investor expectation is that this marks a sustained increase...


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