Liquidating dividend accounting
In effect, the stockholder will own more shares after the stock dividend declaration in the Philippines but its percentage of ownership or equity in such corporation may not increase.
Source of stock dividend could be unissued shares of stock of the corporation requiring an application for exemptions from the Securities Regulation Code (SRC Exemption under SRC Rule 10.1) or from the increase of capitalization in the Philippines requiring an SEC approval on the increase of authorized capital stock.
It is called “common” to distinguish it from preferred stock.
Companies issue preferred stock in order to avoid the following: Unlike common stock, which has no set maximum or minimum dividend, the dividend return on preferred stock is usually stated at an amount per share or as a percentage of par value. 1903 stock certificate of the Baltimore and Ohio Railroad: Ownership of shares is documented by the issuance of a stock certificate and represents the shareholder’s rights with regards to the business entity.
On the other hand, common shares on average perform better than preferred shares over time.
Common stock usually carries with it the right to vote on certain matters, such as electing the board of directors.
For some, dividend declaration is simply a capital restructuring device by transferring free retained earnings to capitalization to increase paid-up capitalization in the Philippines, such as in stock dividends.
Dividends declaration in the Philippines could come in different faces as follows: Dividend declaration is a discretion of the Board of Directors.