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Gentlemen :
This refers to your letter dated October 19, 1990 seeking opinion relative to
the plan of Asset Marketing Corporation to declare cash dividends to its
stockholders during the interim period out of the unrestricted retained earnings of
the company as of July 31, 1990. llcd
Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2018 First Release 1
"Retained earnings represent the balance of net profits, income, gains and
losses of a corporation from the time of its incorporation after deducting
distribution therefrom to shareholders and transfers therefrom to capital stock or
capital surplus or capital surplus accounts. For all practical purposes, the term has
the same meaning as earned surplus." (Ballantine & Sterling, Vol. 1 (1982 ed.), et
141.26 (3)) The board of directors, may, in its discretion, appropriate retained
earnings or portions thereof for designated purposes, in which case they will not be
available for dividends. These appropriations may be for various purposes:
expansion, possible future loss and other contingencies. Restrictions may also be
imposed by law. All these constitute restrictions on retained earnings which render
the amount represented by such appropriations unavailable for dividends. The
retained earnings which are not so appropriated are what are referred to as
unrestricted retained earnings, the only fund out of which dividends can be legally
paid. (Campos, Campos, The Corporation Code "Comments, Notes and Selected
Cases", 1981 ed., p. 773)
Thus, considering that the corporation allegedly has the retained earnings to
cover the dividend declaration, the Commission interposes no objection to the
above proposal, subject to the provisions of Section 43 of the Corporation Code,
and subject further to the following conditions:
3. That should the company sustain losses during the year, cash
distributed to the stockholders of records must be
correspondingly refunded to the Corporation. LibLex
Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2018 First Release 2
(SGD.) RODOLFO L. SAMARISTA
Associate Commissioner
Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2018 First Release 3