From what source must the board of directors declare dividends, and in what forms may they be paid?
The board of directors of a stock corporation is authorized to declare dividends only out of the unrestricted retained earnings of the corporation (SEC. 42, Revised Corporation Code of the Philippines). Dividends may be made payable in cash, property, or in stock to all stockholders based on the outstanding stock held by them. If the dividend declared is a stock dividend, it requires the additional approval of stockholders representing at least two-thirds (2/3) of the outstanding capital stock at a duly called meeting. This ensures that the declaration does not impair the corporation’s capital and that stock dividends, which alter the equity structure, receive broad approval.
02 November 2025
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Nicolas and De Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com/.
