Essential things for a Corporation’s board of directors to consider while declaring cash dividend include calculating the cash amount to be paid, fixing the date, and sending the notice to the stakeholders.
Calculation of the cash to be paid to stakeholders as a dividend
The board of directors must ensure the calculation of the cash amount is conducted. The calculation is undertaken to determine what is to be paid to the shareholders regarding what every individual would get and the total aggregate.
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Fixing the date
The mandate of the corporate’s board of directors is to fix the appropriate date for determining the number of stakeholders entitled to receive the dividends. The board of directors must abide by the state laws that require the date of the dividend to be fixed and recorded (Elmagrhi et al., 2017). More so, the board of directors has the responsibility of determining the payment data. In this regard, the stakeholders meeting data must be determined and recorded when the cash dividend would be released.
Notice to stakeholders
The corporate’s board of directors must ensure the stakeholders are aware of the cash dividend payment. The message in the notice to every stakeholder must clearly articulate the date(s) of cash dividends payment, venue, and the amount that each stakeholder would receive. In this regard, the stakeholders would be informed perfectly of the date, venue, and expectations. The state’s corporate statute requirements on the dividend payment also provide more instructions in terms of the notices to the stakeholders, such as preferred payment methods and details (Driver, Grosman & Scaramozzino, 2020). Therefore, the three important considerations are essential, and the corporate’s board of directors must deliberate and agree before declaring cash dividends.
References
Driver, C., Grosman, A., & Scaramozzino, P. (2020). Dividend policy and investor pressure. Economic Modelling , 89 , 559-576.
Elmagrhi, M. H., Ntim, C. G., Crossley, R. M., Malagila, J. K., Fosu, S., & Vu, T. V. (2017). Corporate governance and dividend pay-out policy in UK listed SMEs. International Journal of Accounting & Information Management .
