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Do shareholders of a corporation have a right to be paid a dividend, when the company...

Do shareholders of a corporation have a right to be paid a dividend, when the company is making large profits? Explain.

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Answer #1

Do shareholders of a corporation have a right to be paid a dividend, when the company is making large profits? Explain.

  • Dividends are payments made to shareholders of a corporation when the business enjoys a profit
  • However, shareholders cannot force the company to make a dividend payment.
  • The board of directors has sole discretion over dividend payments to shareholders
  • But, shareholders have the right to participate in a company's profitability for as long as they own the shares
  • The profit of the company belongs to its owners, its shareholders, so they're entitled to that profit
  • Hence, shareholders of a corporation have a right to be paid a dividend, when the company is making large profits
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