Simple English definitions for legal terms
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Definition: Passed dividend refers to a situation where a company does not pay a dividend to its shareholders, even though it has a history of paying regular dividends. A dividend is a portion of a company's earnings or profits distributed pro rata to its shareholders, usually in the form of cash or additional shares.
Example: Let's say a company has been paying a dividend of $1 per share every quarter for the past few years. However, due to financial difficulties, the company decides not to pay a dividend in the next quarter. This is known as a passed dividend.
This example illustrates how a company may choose to pass a dividend if it is facing financial difficulties or if it wants to retain earnings for future investments.