Legal Definitions - liquidating dividend

A liquidating dividend is a payment made to shareholders when a company decides to suspend all or part of its business operations. This payment is usually made from the capital of the corporation. It is called a liquidating dividend because it is paid out when the company is liquidating its assets.

For example, if a company decides to close down its operations and sell off its assets, it may pay a liquidating dividend to its shareholders from the proceeds of the sale. This payment is made to compensate the shareholders for their investment in the company.

Another example of a liquidating dividend is when a company decides to spin off a division or subsidiary. In this case, the company may pay a dividend to its shareholders from the proceeds of the sale of the division or subsidiary.

Overall, a liquidating dividend is a payment made to shareholders when a company is liquidating its assets or spinning off a division or subsidiary. It is a way for the company to compensate its shareholders for their investment in the company.