Description: An analysis by CBC of 53 Canadian public companies shows that over half of them have paid out dividends to shareholders while collecting the federal government’s Canada Emergency Wage Subsidy (CEWS). The point of the CEWS was to help these and other companies to keep their staff working while facing the economic crush of the corona virus. McGill University accounting professor Preetika Joshi pointed out that in other countries, such as the Netherlands and Spain, businesses that accepted government financial help during the pandemic were forbidden from paying dividends.
Date: December 10, 2020
1) What is your reaction to this article?
2) Do you think Canada should have prevented companies receiving wage subsidies from paying dividends?
3) In Wiley’s Financial Accounting: Tools for Business Decision-Making we learn the Canada Business Corporations Act does require a company to meet two conditions before it can pay cash dividends (page 11-15). What are those conditions?