From which source is a company normally permitted to pay a dividend?
Correct answer: A. Distributable profits available for that purpose
- A. Distributable profits available for that purpose
- B. The company’s authorised share capital
- C. The unpaid personal income of directors
- D. The nominal value printed on each share
Explanation
Dividends are generally paid out of profits lawfully available for distribution, subject to applicable company law requirements. Authorised capital and the nominal value of shares are not themselves sources of dividend payment.
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About Company Law Basics
Company law covers incorporation, separate legal personality, limited liability, shares, the memorandum and articles of association, and the powers and duties of directors. It also includes shareholder meetings, resolutions, company records, audit, winding up and the differences between a registered company, partnership and sole proprietorship.
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