A liquidating dividend occurs

There may be amalgamations, either by transfer of two or more undertakings to a new company, or to the transfer of one or more companies to an existing company".Consolidation is the practice, in business, of legally combining two or more organizations into a single new one.Upon consolidation, the original organizations cease to exist and are supplanted by a new entity.A parent company can acquire another company by purchasing its net assets or by purchasing a majority share of its common stock.This mainly occurs during voluntary liquidations of solvent corporations.

A type of payment made by a corporation to its shareholders during its partial or full liquidation.Despite the tax advantages, investors who receive liquidation dividends often find that they do not cover their initial investment.A dividend paid to shareholders out of a company's capital or assets, rather than its earned income.That is, a liquidating dividend occurs when a company pays more than its total profit in dividends.This usually happens when shareholders believe that the company is no longer sustainable or profitable.