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    Dividend S Policy: - Legal Restrictions

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    Franco Imperial
    Dividend policy must consider legal restrictions on paying dividends if unprofitable or in bankruptcy. Companies should also watch for covenant restrictions. The appropriate policy depends on a company's growth rate, access to capital markets, capacity to maintain dividends, and tax implications of dividends versus capital gains. Mature companies with stable cash flows can pay more dividends while high growth companies should be conservative to retain capital.

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    Dividend S Policy: - Legal Restrictions

    Uploaded by

    Franco Imperial
    39 views1 page
    Dividend policy must consider legal restrictions on paying dividends if unprofitable or in bankruptcy. Companies should also watch for covenant restrictions. The appropriate policy depends on a company's growth rate, access to capital markets, capacity to maintain dividends, and tax implications of dividends versus capital gains. Mature companies with stable cash flows can pay more dividends while high growth companies should be conservative to retain capital.

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    Div

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    Div

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    Dividend policy must consider legal restrictions on paying dividends if unprofitable or in bankruptcy. Companies should also watch for covenant restrictions. The appropriate policy depends on a company's growth rate, access to capital markets, capacity to maintain dividends, and tax implications of dividends versus capital gains. Mature companies with stable cash flows can pay more dividends while high growth companies should be conservative to retain capital.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    39 views1 page

    Dividend S Policy: - Legal Restrictions

    Uploaded by

    Franco Imperial
    Dividend policy must consider legal restrictions on paying dividends if unprofitable or in bankruptcy. Companies should also watch for covenant restrictions. The appropriate policy depends on a company's growth rate, access to capital markets, capacity to maintain dividends, and tax implications of dividends versus capital gains. Mature companies with stable cash flows can pay more dividends while high growth companies should be conservative to retain capital.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Dividends policy

    Legal restrictions: How easy is it to raise new equity


    - Cannot distribute dividens if for the company?
    company is under chapter 11
    - Cannot distribute dividends if
    company is not generating Access to
    profits Watch legal capital
    Other: restrictions markets
    - Covenants Companies with high growth
    rate should be more
    conservative distributing
    Understanding tax rates dividends
    on dividends vs tax rate Growth rate A more mature business has
    on capital gains is critical of the more visibility over cash
    to define best way to Pay attention company flows generated and needed,
    remmunerate shareholders to tax
    therefore can be more
    considera-
    aggresive with its dividends
    tions
    policy

    Reduce cost of Capacity to


    agency and send maintain A cut-back in dividends has a very
    information to the dividends negative effect
    A dividend creates discipline in costs market Before distributing a dividend
    and hence reduces costs of agency
    make sure the company can
    Paying dividens sends information to maintain it in the future
    the market about the financial
    situation of the company
    1

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