Illegal dividend
Common shorthand for a dividend paid when the legal requirements for a lawful distribution were not met. The more precise term is usually unlawful dividend.
Related terms
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Unlawful dividend
A dividend paid without meeting the legal requirements for a valid distribution, commonly because there were insufficient distributable profits.
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Repayment of unlawful dividends
The return of dividends paid without meeting the legal requirements, which may be sought from shareholders or directors depending on the circumstances.
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Distributable reserves
Profits legally available for a company to pay dividends. Paying dividends without sufficient distributable reserves can create repayment and director-liability issues.
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