The formal method by which a company can restrict dividend distributions is called:

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The formal method by which a company can restrict dividend distributions is called appropriation. This involves setting aside a portion of the company's profits, which may be used for a variety of purposes such as reinvesting in the business or paying off debt, and can limit the amount of funds available for dividend payments to shareholders. Deferral, reserve, and declaration are all related to the payment of dividends, but do not specifically refer to the process of restricting or limiting those payments.

The Formal Method by Which a Company Can Restrict Dividend