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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 9864
Experience:  30 years of corporate, litigation and international law
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When a corporate board meets to decide on a dividend, do

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When a corporate board meets to decide on a dividend,
do they vote their shares as a majority,
or does the majority rule ?

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

Are you dealing with a closely held corporation where all the shareholders are directors or just a regular board of directors? Is there any special agreement among the shareholders that allows shareholders to vote on issues such as dividends?

Customer: replied 1 month ago.
33 shares x 3 directors, 1 share 1 director.Dividends have not been declared since the first one, @ $1.00 per share
Customer: replied 1 month ago.
$1.00/share dividend paid originally, 1981, nothing since.
Owners are 2nd generation closely held family business
Customer: replied 1 month ago.
Dividends are called for in corporate bylaws, never changed or amended since company was incorporated in 1980.

The Board of Directors is what makes decisions on dividends. One vote per director. In a small closely held corporation, the directors make the decision as a practical matter and it is based on the vote of holders of a majority of the shares. Only if there is a specific agreement among shareholders that alters these basic procedures do different rules apply. Even though the bylaws say dividends are payable if the Board in its discretion do not believe that would be in the best interest of the corporation, it would be difficult to get a court to over ride that decision if it had any reasonable basis.

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Customer: replied 1 month ago.
I appreciate the help and answer.

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