Legal Definitions - distribution

In legal and financial contexts, distribution refers to the act of dividing and giving out assets, funds, or property to their rightful recipients. This process can occur in various situations, such as the settlement of an estate, the disbursement of company profits, or the initial sale of securities to the public.

• Example 1: Estate Settlement

  After a beloved grandmother passes away, her will specifies that her antique jewelry collection should go to her eldest granddaughter, her extensive library to her local community center, and the remainder of her financial assets to be divided equally among her three children. The executor of the will then carries out these instructions.

  This illustrates distribution because the grandmother's assets are being divided and given out to the specific beneficiaries named in her will, ensuring each rightful recipient receives their designated portion of the estate.

• Example 2: Corporate Dividends

  A well-established manufacturing company, having achieved significant profits over the past year, announces that it will pay a cash dividend of $1.25 per share to all its common stockholders. On the designated payment date, funds are transferred to the brokerage accounts of the shareholders.

  This is an example of distribution because the company is giving out a portion of its accumulated profits (funds) to its shareholders, who are the legal owners and therefore the rightful recipients of these earnings.

• Example 3: Initial Public Offering (IPO)

  When an innovative software company decides to offer its shares to the public for the first time, an investment bank acts as the underwriter. The bank manages the process of selling millions of newly issued shares to a wide range of investors, including large institutions and individual buyers, at the initial offering price.

  This scenario demonstrates distribution in the context of securities. The investment bank is facilitating the initial sale and allocation of the company's shares to the public, effectively giving out ownership stakes to new investors.