The Canadian federal laws and respective provincial relevant acts include provisions prohibiting firms from paying dividends under certain circumstances.The intent of such provisions is to protect the firm's ________ against excessive dividend payments.

Question

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The purpose of provisions prohibiting firms from paying dividends under certain circumstances is to protect the firm's creditors. If a company pays out excessive dividends, it can potentially harm the company's ability to pay its debts, which could put creditors at risk. Therefore, these provisions help to ensure that companies maintain a reasonable financial position and do not endanger their ability to repay debts. Shareholders, stakeholders, and management may also benefit from reasonable dividend policies, but the primary aim is to safeguard creditors.

The Canadian Federal Laws and Respective Provincial Relevant Acts Include