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Dividends can be paid only if they have been officially declared by the board of directors. The board must pass a formal resolution authorizing the dividend payment. Notices of the dividend are then published. Once a dividend declaration has been made public, the dividend becomes a liability and must be paid. An example of a dividend notice by Nouveau Corporation is shown in Figure 11.3.
Figure 11.3 An Example of a Dividend Notice
There are three dates associated with a dividend. Usually dividends are declared on one date, the date of declaration (May 25, 2016 in this case); they are payable to shareholders on a second date, the date of record (June 7, 2016); and the dividend is paid on a third date, the date of payment (June 26, 2016).
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