Ontario Barrister and Solicitor Practice Exam

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A Canadian Controlled Private Corporation (CCPC) can only pay an eligible dividend to the extent it has sufficient what?

  1. Retained earnings

  2. Paid-up capital

  3. General Rate Income Pool

  4. Shareholder approval

The correct answer is: General Rate Income Pool

While it is true that a CCPC can only pay an eligible dividend when it has sufficient General Rate Income Pool, the other options provided are also important factors to consider. Retained earnings and paid-up capital are both sources of funds that can be used to pay dividends but they are not necessarily always sufficient. Shareholder approval is also required for certain types of dividends, such as capital dividends.

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