Is a resolution from the directors required to declare a dividend?

The declaration of a dividend generally requires approval from the board of directors. The decision may be made at a board meeting or, where the conditions stipulated by law are met, by means of a written resolution of the directors.

The decision declaring the dividend must be properly documented. Depending on the circumstances, it may specify, in particular:

• the amount of the dividend or how it is calculated;
• the class of shares entitling the holder to the dividend;
• the date of declaration;
• the reference date for determining which shareholders are entitled to it, when such a date is set;
• the date or terms of payment;
• any other relevant modality.

Before declaring the dividend, the directors must also verify that the financial conditions and restrictions stipulated by applicable law are met. These rules may differ depending on whether the company is incorporated in Quebec or under federal law.

If the decision is made at a board meeting, it should be recorded in the minutes of the meeting. If it is made by means of a written resolution, the resolution must be adopted in accordance with the applicable requirements.

The minutes or written resolution recording the declaration of the dividend must be kept with the other corporate documents of the company.

In summary , it is generally the board of directors that must authorize the declaration of a dividend. This decision can be made at a meeting or by written resolution where permitted by law, but in all cases it must be properly documented and comply with applicable legal requirements.