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:

Negative Consequences

Unfavorable outcomes or damages that result from an action or decision.

Reflexivity Of Knowledge

Reflexivity of knowledge suggests that knowledge is not just a passive reflection of reality but is influenced by the biases and perspectives of those who produce it.

Mutual Recognition

A concept in social and political theory emphasizing the reciprocal acknowledgement and respect of the rights, dignity, and agency of others as fundamental to ethical relations.

Mutual Display

The act of exhibiting or demonstrating something mutually among individuals or groups, often used in the context of social rituals and interactions.