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Dividend resolution template for Canadian corporations

Fill in the details and your directors’ resolution appears as you type, with the solvency wording your statute requires. Works for federal, Ontario, BC, Alberta and Quebec corporations.

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Where the corporation was incorporated. Other provinces and territories are not covered yet.

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Ask your accountant which applies. The wording changes to match.

Every director signs a written resolution.

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What this dividend resolution template includes

A dividend is not paid until the directors declare it, and the written resolution is the record that they did. This template produces a resolution of the directors that:

Use one resolution per class of shares. If different shareholders hold different classes and receive different amounts, prepare a resolution for each class, and check that your articles allow dividends on one class without the others.

Dividend resolution questions

Who declares a dividend in a Canadian corporation?

The board of directors. Directors declare dividends by resolution, either at a meeting or in a written resolution signed by every director. Shareholders do not vote on an ordinary dividend unless the articles or a unanimous shareholder agreement give them that power.

What is the solvency test for a dividend?

Before declaring a dividend, the directors must be satisfied the corporation can afford it. The test depends on the statute:

The template recites the test that matches the jurisdiction you pick. Directors who approve a dividend that fails the test can be personally liable to repay it.

What is the difference between the record date and the payment date?

The record date fixes who receives the dividend: the shareholders on the securities register at the close of business that day. The payment date is when the money is paid or credited. In a closely held corporation the two are often the same day, or a few days apart. The record date should not be later than the payment date.

Should the dividend be eligible, non-eligible or a capital dividend?

That is a tax question for your accountant. In general, an eligible dividend is paid out of income taxed at the general corporate rate and must be designated in writing to shareholders when it is paid. A capital dividend is paid tax-free out of the capital dividend account and needs a Form T2054 election filed by the earlier of the day it becomes payable and the day any part of it is paid. Most small-business dividends are non-eligible.

Where do I keep the signed resolution?

In the corporation’s minute book, with the other resolutions of the directors. Your accountant may also ask for a copy at year end. A T5 slip is filed for most taxable dividends paid to individuals.

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