Asked by Claire Fledderman on Jun 04, 2024
Verified
Dividends are considered ________ if they are paid when the corporation is insolvent.
A) illegal
B) invalid
C) irresponsible
D) debts
E) credits
Illegal Dividends
Dividends distributed by a company despite it not having sufficient profits or legally available capital, violating corporate law or its own articles of incorporation.
- Pinpoint the personal responsibilities and liabilities that shareholders bear, particularly when facing situations of corporate financial distress.
Verified Answer
RH
Ramla HassanJun 06, 2024
Final Answer :
A
Explanation :
Dividends paid when a corporation is insolvent are considered illegal because they can harm creditors' rights and the overall financial stability of the company.
Learning Objectives
- Pinpoint the personal responsibilities and liabilities that shareholders bear, particularly when facing situations of corporate financial distress.