Board Resolution: Annual Dividend Declaration
(NY Corporation)

Summary

This template is a resolution of directors for use by a New York corporation's board of directors to declare an annual dividend to the holders of its preferred and common shares. This template includes practical guidance and drafting notes. A corporation may declare and pay dividends on its outstanding shares, except at such times when the corporation is insolvent or the payment of such dividends would render it insolvent, or where the payment of such dividends is contrary to any restrictions contained in its certificate of incorporation. N.Y. Bus. Corp. Law § 510(a). Dividends may be declared and paid out of surplus, so that the net assets of the corporation remaining after such declaration and payment shall at least equal the amount of its stated capital or, where there is no surplus, out of the corporation's net profits for the fiscal year in which the dividend is declared and/or the preceding year. N.Y. Bus. Corp. Law § 510(b). This clause provides for payment of all accrued dividends for the preferred shares, the amount of which dividend should have been set forth in the certificate of incorporation or other document. The common shares are to receive a dividend based on a percentage of the par value of the common shares, which is obviously premised on such shares having a par value; the alternative language can be used in cases where the common shares do not have a par value, in which event the dividend is for a certain dollar amount per share. This template may be tailored to suit each transaction. For a full listing of key content covering Board Resolutions for Private Company Corporate Governance, see Private Company Corporate Governance Board Resolutions Resource Kit. For a full listing of key content covering New York corporate formation, organization, maintenance, ownership, management, and dissolution, see Corporation Resource Kit (NY). For a discussion of directors in New York, see Management and Indemnification (NY Corporation).