Dividend
A dividend is the distribution of a portion of a company's profits to its shareholders. It constitutes the return on their shareholding.
Dividend is the portion of the profits which, following adoption of the annual accounts and a resolution of the general meeting, is distributed to the shareholders. Under Dutch corporate law (Book 2 of the Dutch Civil Code), strict rules apply to ensure that the company’s equity is not impaired.
Dividend distributions are relevant because they reward shareholders for their investment while at the same time safeguarding the solvency and continuity of the company. Unlawful distributions may give rise to liability on the part of directors or shareholders.
In practice, dividends are typically distributed only where sufficient profits or free reserves are available, taking into account tax implications and any restrictions contained in the articles of association.
“The general meeting resolved to distribute a dividend of €2.50 per share following approval of the annual accounts.”
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