Which of the following statements about issuing common shares is true?
A) The total amount received is referred to as legal capital and it may be paid out as dividends once the company is proﬁtable.
B) The total amount received is referred to as legal capital and it cannot be paid out as dividends.
C) All classes of common shares pay identical dividends.
D) All classes of common shares have the same voting rights.

Question

Quizplus · Accepted Answer

Legal capital is the portion of a company's equity that cannot legally be distributed to the shareholders as dividends. This is to ensure that the company retains enough capital to remain solvent and protect creditors.

Which of the Following Statements About Issuing Common Shares Is