Question

State whether the following statement is True or False :
Dividend once declared cannot be revoked.

Hint:

Think of a declared dividend as a promise that becomes a legally binding debt. Once the shareholders approve it, the company is locked in.

Answer 1

Once a dividend is declared by the Board of Directors and approved by the shareholders at an Annual General Meeting (AGM), it becomes a debt payable by the company to its shareholders. As a legal obligation, it cannot be unilaterally revoked by the company.