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To embed, copy and paste the code into your website or blog: A dividend involves three steps.  First, the dividend is declared by the board of directors, second a record date is determined by the board (or by corporate law), and lastly the dividend is paid.  Occasionally, the question arises whether a board may cancel a dividend after it has been declared and before either the record or payment dates. The Court of Appeal in Smith v. Taeker, 133 Cal. App. 351, 352, 24 P.2d 182 (1933), found that it was "universally held" that the mere declaration of a dividend creates debts against the corp...