An illegally paid dividend may be recovered from a shareholder who received it with knowledge of the illegality.

Name: An illegally paid dividend may be recovered from a shareholder who received it with knowledge of the illegality.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Shareholders who receive an illegally paid dividend with knowledge of its illegality can be held liable to repay the amount to the company. This is because they are considered to have acted in bad faith by accepting the dividend that they knew was not legally permissible.

An Illegally Paid Dividend May Be Recovered from a Shareholder