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1. Equity investments - ordinary shares.

Dividends are amounts paid to an equity investor, in proportion to the size of their equity holding.

Most dividends are paid in cash, but they may also be in non-cash form, such as a scrip dividend.

Dividends are not generally an allowable expense for corporate tax calculation purposes, because they are deemed to be an appropriation of (after-tax) profits to the shareholders, rather than a business expense necessary to earn the taxable profits.

Ordinary share dividends are generally discretionary.

However, if the company declares an ordinary dividend, all ordinary shareholders are entitled to receive it.

2. Other investments.

Similar payments to other investors.

3. Liquidation - claims.

Amounts paid to creditors in a liquidation.

Especially if the amounts are a fraction or proportion of the claims, rather than the full amount.

In the event of insufficient residual assets to pay all of the liabilities, all creditors of the same class in the liquidation waterfall receive the same proportion of their claims.

Sometimes known as a liquidating dividend.

See also