Delaware GCL § 170
Dividends; payment; wasting asset corporations

Delaware GCL § 171
Special purpose reserves

Delaware GCL § 172
Liability of directors and committee members
as to dividends or stock redemption

Delaware GCL § 173
Declaration and payment of dividends

Delaware GCL § 174
Liability of directors for unlawful payment of dividend or unlawful stock purchase or redemption; exoneration from liability; contribution among directors; subrogation

Corporation may declare and pay dividends

• only from surplus,  or
• if there is no surplus, net profits for the fiscal year in which the dividend is declared and/or the previous fiscal year

In addition, a corporation may not pay dividends from net profits if doing so leaves its "capital" impaired.

Corporation may not repurchase its common stock it would result in impaired capital

• Payment of any dividend or redemption of common
  stock in excess of the corporations surplus will be deemed to be an impairment of the corporations capital
• Capital - A corporations "capital" is defined, generally,
  as the portion of consideration it received for issued
  and outstanding shares of capital stock which the
  directors determine to be capital at the time of
  issuance, but in no event less than the aggregate par
  value of such shares
• Surplus - A corporations "surplus" is (A) the excess of
  (x) the current fair value of the corporations total assets
  minus (y) the current fair value of the corporations
  total liabilities, less (B) the corporations capital

Fulweiler v Spruance (Del 1966)

Blandin v United North & South Dev Co (Del 1957)

Lynam v Gallagher (Del 1987)

Trustees of Dartmouth College v Woodward (US 1819)

Weinberg v Baltimore Brick (Del 1957)

• aff'd (Del Ch 1955)

Liese v Jupiter (Del Ch 1968)

Baron v Allied Artists Pictures appeal dismissed:
365 A 2d 653 (Del Ch 1975)

Steel v Steel (Del Ch 1956)

Gabelli & Co v Liggett Group (Del 1984)

Baron v Allied Artists Pictures appeal dismissed:
365 A 2d 653 (Del Ch 1975)

Leibert v Grinnell (Del Ch 1963)

Treves v Menzies (Del Ch 1958)

Moskowitz v Bantrell (Del 1963)

Ivanhoe Partners v Newmont Mining (Del 1987)

Harff v Kerkorian aff'd in part rev'd in part (Del 1975)

Burton v Exxon (SD NY 1984)

Anadarko Petroleum v Panhandle Eastern CA No 8738 aff'd (Del 1988)

Klang v Smith's Food & Drug Centers (Del 1997)

Wood v National City Bank (2^nd Circuit 1928)

Rockwood v Foshay (8^th Circuit 1933)

Hall v Sunshine Mining (Bkrptcy D ID 1993)

In re Kettle Fried Chicken of America (6^th Circuit 1975)

Stock dividend

• SEC Telephone Manual FAQ 1999

Dividend policy disclosures

• SEC disclosure issues 12.01.05

Delaware General Corporation Law