What is an ordinary dividend? | ScriptaLegal
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Frequently asked questions > Company > Business Corporation > What is an ordinary dividend?

What is an ordinary dividend?

The "ordinary dividend" is actually a dividend paid in money that is taxable for the shareholder receiving it. However, we note that taxation of a dividend is different from that of an income, such as a salary.

Once declared by the business corporation, the "ordinary dividend" can be paid to the shareholders concerned in different ways: 1) all at once, at the time of the declaration; 2) by monthly installments, equal and consecutive; 3) at fixed dates predetermined in advance by the board of directors; or 4) at any later date to be determined by the board of directors, in its sole discretion.

The board of directors has discretion for determining the terms and conditions of payment of the dividend declared.

In most cases, the board of directors will determine these terms and conditions according to the financial capacity of the business corporation, particularly in light of its accumulated retained earnings and its operating budget for the fiscal year concerned by a declaration of dividends.

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