ALVINs NOTE for Kaye

Right to Receive Dividends

DIVIDENDS is part of the earnings of a corporation that is distributed to its shareholders,

usually paid quarterly. Or in other term right to profit.
Example Elijah has 1 share in Marnessa Corporation, is he a owner of the corporation? Yes.
That means Elijah has the right to the profitability earnings of the corporation regardless of the
number of shares he owns.
GR: Stock corporations are prohibited from retaining surplus profits in excess of 100% of their
paid-in capital stock
If the corporation performs well and the profitability of corporation is in headway that cause
surplus profits in excess of 100% of their paid in capital stock they can retain the surplus.

Exceptions:
a. when justified by definite corporate expansion projects or programs approved by
BOD
the usage of the surplus is possible provided its allocation is with justifiable allocation
like expansion of projects or programs. The usage shall be approved by the BOD.
b. when corporation is prohibited under any loan agreement from declaring dividends
without its consent
c. when such retention is necessary under special circumstances
such as when there is need for special reserve for probable contingencies( possible
event).
Fund to use for the preparation of possible occurrence of events.
Form of Dividends:
1. Cash Dividends can be declared by mere Board resolution from URE; revocable before
announcement; can be payable to holders of delinquent stock but to be applied to the
unpaid balance on the subscription

Alvin Corporation pays a 100 pesos dividend to shareholders. An investor who owns
1,000 shares of JPF will receive Php 100,000
1,000 shares x Php 100 = Php. 100, 000
Cash Dividends shall be first applied to the unpaid balance
2. Property Dividends

3. Stock Dividends can be declared by the board with approval of 2/3 OCS
With a stock dividend, each investor will receive an additional number of shares based on the
number of shares that they own. The market price of the stock will decline after the stock
dividend has been distributed to reflect that there are now more shares outstanding, but the
total market value of the company will remain the same.
Example:
If HRT pays a 5% stock dividend to its shareholders, an investor with 500 shares will receive an
additional 25 shares. This is determined by multiplying the number of shares owned by the
amount of the dividend to be paid.
500 x 5% = 25

Note:

No dividends can be declared out of capital, except liquidating dividends distributed at

dissolution.
Dividends can be declared only out of URE
Stock dividends cannot be issued to non-stockholders even for services rendered