What is the required vote to declare cash or property dividends?

What is the required vote to declare cash or property dividends?

• A. Approval by at least majority vote of the board of directors.
• B. Approval by stockholders representing at least 2/3 of the outstanding capital stock.
• C. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least majority of the outstanding capital stock.
• D. Approval by stockholders representing at least 2/3 of the outstanding capital stock.

Answer: (A)

Dividends are declarations of profits by the company, and the board of directors is the body empowered to declare them. When there are sufficient retained earnings or unrestricted surplus and the proposed dividend would not impair capital, the board can approve a cash or property dividend by a majority vote at a board meeting (or by written consent). Stockholders do not need to approve the declaration itself, unless the by-laws or governing documents specify otherwise, so a majority board vote is the standard requirement. The other options would only apply if the company's rules impose stockholder approval or a higher consensus, which is not the usual rule.

Dividends are declarations of profits by the company, and the board of directors is the body empowered to declare them. When there are sufficient retained earnings or unrestricted surplus and the proposed dividend would not impair capital, the board can approve a cash or property dividend by a majority vote at a board meeting (or by written consent). Stockholders do not need to approve the declaration itself, unless the by-laws or governing documents specify otherwise, so a majority board vote is the standard requirement. The other options would only apply if the company's rules impose stockholder approval or a higher consensus, which is not the usual rule.