Not necessarily. As long as a dividend is only being considered or recommended, the board of directors can decide not to declare it. The situation is different when a dividend has already been validly declared.
Once declared, the dividend may create rights for the holders of eligible shares. Therefore, the board of directors cannot necessarily cancel it simply by adopting a new resolution.
The fact that the dividend has not yet been paid does not, in itself, mean that it can be cancelled. Financial restrictions under the applicable law at the time the dividend is declared and paid must also be considered. Both in Quebec and at the federal level, rules address, among other things, the company's ability to meet its liabilities as they fall due. Under the federal regime, an additional test regarding the realizable value of the company's assets in relation to its liabilities and declared capital must also be considered.
The possibility of modifying or cancelling a dividend that has already been declared depends in particular on:
If an error is discovered after the declaration or if the company's financial situation changes before payment, it is best to assess the situation before adopting a resolution to amend or cancel the dividend.
It is also important to distinguish between the cancellation of a validly declared dividend and the correction of a declaration that contained an error or did not comply with applicable legal requirements. The measures to be taken may differ depending on the circumstances.
In summary , a validly declared dividend cannot necessarily be cancelled, even if it has not yet been paid. The possibility of modifying or cancelling it depends on how it was declared, the resulting rights, and the applicable rules.