Main Content

An Introduction to the Law of Corporations: Cases and Materials

DGCL Sec. 170 - Dividends

When a corporation has profits, it may distribute those profits back to stockholders. These profit distributions back to stockholders are known as “dividends”. 

The decision whether or not to issue dividends to stockholders lies wholly within the discretion of the board of directors. Unless the certificate of incorporation states otherwise, stockholders have no right to corporate dividends.

Some old-line corporations, like G.E. are well-known for a long-standing board policy of making dividend payments to their stockholders. Other corporations, like start-up corporations or corporations in high-growth stages of development, have the exact opposite policy. Companies like Alphabet or Facebook have board policies against making dividend payments to stockholders, opting to reinvest all their profits into the company.