Dividend restraint


This term applies to state policy on dividend payments and the manner in which it attempts to Hmit monies so paid out. This may be by express directive, e.g. that dividends must not exceed those paid in the previous year, or must not be increased by more than a stated percentage. Another method used in the past was to penalize dividend payments by exacting additional taxation; it was thought that in this way companies would be discouraged from declaring dividends and that, if they were not, a very large portion would accrue to the Treasury.

Reference: The Penguin Business Dictionary, 3rd edt.