Pharmaceutical Company (PC) has made record profits in the last 10 years. For each of the first 9 years, PC has declared dividends. In the 10th year, however, PC decides not to decare dividends and to reinvest that money into new drugs. Harry, a shareholder who relies on the dividends for income, sues the Board of Directors and the Officers for failing to issue a divident in the 10th year. Who wins and why?

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Business

Donavan Jefferson

17 December, 01:04

Pharmaceutical Company (PC) has made record profits in the last 10 years. For each of the first 9 years, PC has declared dividends. In the 10th year, however, PC decides not to decare dividends and to reinvest that money into new drugs. Harry, a shareholder who relies on the dividends for income, sues the Board of Directors and the Officers for failing to issue a divident in the 10th year. Who wins and why?

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Kyra · Answer 1

As in my consideration the pharmaceutical organization might won the case, as for all the dividend bonds concerned decision are taken by the organizational financial advisor, and it's the responsibility of financial advisor to choose whether to issue the revenue as dividend bonds or to hold them for more investment to generate large revenue. Thus it's the choice of the corporate that whether to issue dividend or not.