When It Is Unlawful to Declare Dividends Because of a Deficiency

question 17

Multiple Choice

When it is unlawful to declare dividends because of a deficiency in the capital fund, and yet the shareholders want a quick pay- out, then

• A) Revenue Canada can issue "not withstanding" tax credits.
• B) shareholders can lend money to the corporation and receive interest payments in return.
• C) the corporation can re- capitalise at a lower amount.
• D) the corporation needs to earn enough profits to restore the deficiency.
• E) wages can be paid to officers instead of dividends.

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Definitions:

Situational Helplessness

A condition where an individual feels powerless to change their situation or outcomes, often resulting from uncontrollable events.

Incompetent

Lacking the necessary skills, knowledge, or ability to do something successfully or at an expected standard.

Rules

Prescribed guidelines for conduct or action within a particular context or system, often governing behavior and processes.

Attributes

Characteristics or features that help in distinguishing or describing an object, concept, or entity.