Which of The Following Is Not A Right Possessed By Common Stockholders of A Corporation?

Which of the following is not a right possessed by common stockholders of a corporation?

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Which of the following is not a right possessed by common stockholders of a corporation?

Question:

Among the following options, which of the following does not represent rights possessed by stockholders of common shares in a corporation:

• The right to elect the members of the board of directors
• The right to receive guaranteed dividends
• The right to sell their stocks to a third party
• The right to receive proceeds in the event of a company liquidation 

Answer:

Shareholders of common stock do not have the right to receive a minimum amount of dividends from the corporation.

Dividends

Corporations issue dividends to common stockholders when they have net profits they wish to distribute to their stockholders.

However, a corporation is not required to issue any dividends to common stockholders.

In fact, the corporation may choose to keep all its net income as retained earnings and reinvest the money into the company operations rather than distributing it to the shareholders.

However, if the corporation believes that it has made sufficient profits to be able to adequately fund the company operations and pay the common stockholders profits, it will declare dividends.

The amount of the dividends and whey they are paid are left to the discretion of the board of directors.

Takeaways 

Let’s look at a summary of our findings.

Which of the following is not a right possessed by common stockholders of a corporation?

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