Legal Definitions - passed dividend

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Definition of passed dividend

Definition: Passed dividend refers to a situation where a company does not pay a dividend to its shareholders, even though it has a history of paying regular dividends. A dividend is a portion of a company's earnings or profits distributed pro rata to its shareholders, usually in the form of cash or additional shares.

Example: Let's say a company has been paying a dividend of $1 per share every quarter for the past few years. However, due to financial difficulties, the company decides not to pay a dividend in the next quarter. This is known as a passed dividend.

This example illustrates how a company may choose to pass a dividend if it is facing financial difficulties or if it wants to retain earnings for future investments.

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Simple Definition

A dividend is a part of a company's earnings or profits that is given to its shareholders. It can be in the form of cash or additional shares. Sometimes, a dividend is declared but not yet paid, which is called an accumulated dividend. There are different types of dividends, such as cash dividend, stock dividend, and property dividend. A passed dividend is when a company doesn't pay a dividend that it usually does. Preferred shareholders usually get paid a fixed amount before common shareholders. A dividend can also be used to buy more shares in the company instead of being taken as cash.

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