Accumulated dividend

What does Accumulated dividend mean in American Law?

The definition of Accumulated dividend in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

This is a dividend which may be said to be accrued in the same sense as accrued interest. It is a much less common phenomenon, however, because as a general rule there is no obligation for a corporation to declare any dividend at all, let alone at any given time. Thus dividends ordinarily become “accrued” only during the period (usually quite short) between declaration by the corporation and payment. Since the corporation can avoid being obliged to pay a dividend it cannot afford merely by not declaring it, it will be relatively uncommon for a declared dividend to remain unpaid. There are, however, obligations called “dividends” which are not really discretionary at all, e.g., promised payments with respect to deposits in savings banks which payments are “really” interest. And the in struments governing the rights of holders of preferred stock usually provide that while there is no duty to pay the promised preferred dividend, no dividend may be paid to holders of common stock until all promised regular dividends missed in the past are paid to the holders of the preferred stock. In that sense, then, there can be “accrued dividends” on preferred

stock.

Meaning of Accumulated Dividend

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