CORPORATIONS - RIGHT OF PREFERRED STOCK TO STOCK DIVIDEND AFTER PAYMENT OF PREFERENTIAL DIVIDEND

Authors

Abstract

Plaintiff held 500 shares of the common stock of an Illinois corporation, organized by plaintiff and defendant with a capital stock of $160,000, divided into 2000 shares of common and 30,000 shares of preferred stock, each with a par value of $5.00 per share. The statutes of Illinois provided that the capital stock might be divided into classes but that this classification and the rights and duties thereunder must be stated in the articles of incorporation and on the stock certificates. The articles and certificates gave the preferred shares a preference on dissolution, and to dividends to the extent of seven per cent. Under the constitution of Illinois each share, common or preferred, entitled the holder thereof to one vote. In 1929 the board voted a stock dividend of common stock, one share for each common and preferred share outstanding. The stock was issued, and subsequently a cash dividend was paid on all the common stock. The court granted plaintiff's prayer for the cancellation of the stock dividend and for the repayment of the cash dividend. Tennant v. Epstein, 356 Ill. 26, 189 N. E. 864 (1934).

Recommended Citation

CORPORATIONS - RIGHT OF PREFERRED STOCK TO STOCK DIVIDEND AFTER PAYMENT OF PREFERENTIAL DIVIDEND, 33 Mich. L. Rev. 439 (1935).
Available at: https://repository.law.umich.edu/mlr/vol33/iss3/14