Under the Canada Business Corporations Act, a corporation cannot pay a dividend if it would then be unable to pay its liabilities.

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Under the Canada Business Corporations Act, a corporation is prohibited from declaring or paying a dividend if there are reasonable grounds for believing that the corporation is, or would after the payment be, unable to pay its liabilities as they become due, or if the realizable value of the corporation's assets would thereby be less than the sum of its liabilities and stated capital of all classes.

Under the Canada Business Corporations Act, a Corporation Cannot Pay