When can a company decide to pay in dividends?
I have invested in a small LLC. They have come close to folding many times over the last 5 years. It now looks like the investment may yet make a profit. The original contract was set up as a loan but over 5 years they have not paid a penny. The loan would have been in default years ago. Now it looks like they may make a profit. I would like to restructure the loan, for tax purposes, into an investments with a one time dividend and repayment of principle. Can this restructuring be done prior to receiving any payments? I believe the LLC would accept the contract wording change.
Thanks
Tim
Answers
872 points
CUWu answered one year ago …
A company can pay dividends whenever it likes - it's usually in an effort to return value to shareholders because they're no longer able to reinvest that excess cash back into its business at a high rate of return (so they give the shareholders the opportunity to get a higher return elsewhere).
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