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LSDefine
Simple English definitions for legal terms
informal dividend
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A quick definition of informal dividend:
An informal dividend is when a company pays its shareholders in a way that is not a regular dividend. This could be in the form of salary, rent, or interest instead of cash or additional shares. It's like getting a surprise bonus from your boss instead of your regular paycheck. Sometimes this is called a disguised dividend.A more thorough explanation:
An informal dividend is a payment made to a shareholder that is not officially declared as a dividend by the company. This can include payments of salary, rent, or interest that are given to a shareholder instead of a dividend. It is also known as a disguised dividend.
For example, if a company decides not to declare a dividend but instead pays its shareholders a bonus, that bonus would be considered an informal dividend. This payment is not subject to the same regulations and taxes as an official dividend.