The most restrictive test for the issuance of dividends by a corporation is the net assets test.

Question

Quizplus · Accepted Answer

The most restrictive test for the issuance of dividends by a corporation is often considered to be the insolvency test, which prevents a corporation from issuing dividends if doing so would render it insolvent. The net assets test, which requires that dividends not exceed the surplus of net assets over capital, is generally less restrictive.

The Most Restrictive Test for the Issuance of Dividends by a Corporation