Question

Receiving dividends is a group right of share holders.

• A. True
• B. False
• C. Partly True
• D. Partly False

Answer 1

The correct option is B False

Dividends are the payments made out of distributable profits available to company. In simple terms, it is defined as that portion of profits of the company allocated to the holders of shares in the company. Shareholders do not have an automatic to receive dividend payment and also there is no legal obligation on company to declare dividends unless it is proposed by directors of the company and approved by the shareholders. Once dividend is declared by the company then it is right of shareholders to receive payment, otherwise shareholders can take legal action against the company. Therefore, the statement that receiving dividends is a group right of shareholders is incorrect.