Corporate Dividend and Distribution Requirements in Missouri

At a glance

Requirements one by one

Governing law, entity, distribution, and scope

RSMo §§ 351.015, 351.180, 351.200, 351.210, and 351.220 apply separate rules to ordinary Chapter 351 corporations, dividends, paid-in-surplus distributions, and purchases or redemptions. Unlike a Model Act provision built around one broad definition, Missouri's dividend section opens more narrowly: “The board of directors of a corporation may declare and the corporation may pay dividends on its shares in cash, property, or its own shares.”

This page reads those related provisions together without treating liquidation, director liability, or a creditor remedy as part of the voluntary-distribution test.

Board, committee, shareholder, and charter authority

RSMo §§ 351.220 and 351.310 put dividend declaration and corporate management with the board. Purchases and redemptions likewise proceed by board resolution under § 351.200. RSMo § 351.330 permits delegation only when the bylaws provide for it and the board's resolution, adopted by a majority of the whole board, designates at least two directors. The committee then has the authority given by the resolution or bylaws.

The articles remain critical. Section 351.220(7) says, “No dividend shall be declared or paid contrary to any restrictions contained in the articles of incorporation,” while §§ 351.180 and 351.200 place redemption terms and purchases or redemptions under the articles and applicable class terms.

Cash, property, shares, debt, repurchase, and redemption forms

RSMo § 351.220 expressly permits cash, property, and the corporation's own shares as dividend forms. Section 351.210 permits paid-in surplus to be distributed “in cash or in kind.” Sections 351.180 and 351.200 separately cover purchases and redemptions; properly redeemable shares may be redeemed for cash, property, rights, or securities of the same or another corporation.

Those provisions do not state a general indebtedness-dividend form. A security may be redemption consideration under § 351.180, but that does not create a general statutory priority rule for distribution debt.

Surplus, net-profit, equity, and capital-source test

RSMo § 351.220(1) says no dividend may be declared or paid when net assets are below stated capital or when payment would reduce net assets below stated capital. Section 351.015 excludes the corporation's own shares from net assets for this test and defines both paid-in surplus and stated capital.

A dividend declared from paid-in surplus also triggers § 351.210. That section requires all accrued cumulative dividends on entitled preferred or special shares to be fully paid and repeats the stated-capital floor. Missouri provides no alternative based on current or prior-year net profits in these provisions.

Liquidity, balance-sheet, liability, and preference test

Missouri does not use the Model Act's general paired debts-as-due and assets- versus-liabilities-plus-preferences tests in RSMo §§ 351.210–351.220. Its main dividend limit instead compares net assets with stated capital.

The debt safeguard is transaction-specific. Under § 351.200(1), a purchase or redemption from stated capital cannot occur unless the remaining assets “are sufficient to pay any debts of the corporation the payment of which has not been otherwise provided for.” Paid-in-surplus distributions have the separate cumulative-preferred-dividend condition in § 351.210(1).

Financial statements, valuation, reserves, and reliance

RSMo §§ 351.200–351.220 do not prescribe reasonable accounting statements, fair valuation, an alternative valuation method, a reserve formula, or reliance on officers, employees, committees, or experts for these tests. Section 351.015 instead supplies the controlling capital vocabulary: paid-in surplus is the portion of share consideration not constituting stated capital, adjusted for formal reductions, and net assets exclude the corporation's own shares.

That silence does not select an accounting or valuation method for a particular corporation. Applying the statutory terms to the financial record is outside this survey.

Record date, measurement date, payment delay, and revocation

RSMo § 351.250 lets the board close the transfer books or, unless the bylaws prohibit it, fix a record date for dividend-payment recipients. Either date may be no more than 70 days before payment. The section states a default for meeting voters but does not state a default dividend-payment record date.

Section 351.220 measures its net-assets floor at two points because it bars both declaration and payment at a prohibited time. Paid-in-surplus distributions are tested when made under § 351.210, and a stated-capital purchase or redemption looks to assets remaining after the transaction under § 351.200. These sections state no 120-day authorization rule or general power to revoke an authorized distribution.

Class, series, equal treatment, stock distributions, and fractions

RSMo § 351.180 makes class and series dividend preferences depend on the articles or a board designation authorized by the articles. Preferred or special dividends must be paid or declared and set apart to the extent of their preference before remaining classes or series receive a dividend.

For an own-share dividend, § 351.220 moves surplus into stated capital. Par-value shares use aggregate par value; no-par shares with an involuntary-liquidation preference use aggregate preferential amount; and other no-par shares use the board-fixed value disclosed to recipients when paid. A same-class split is not a share dividend. Under § 351.300, the corporation may issue fractions, pay their cash value, or issue conditional scrip; fractional-share certificates carry dividend rights, while scrip does not unless the board resolution says so.

Distribution debt, priority, liquidation, insolvency, and boundaries

RSMo §§ 351.180 and 351.200–351.220 state no general priority for distribution debt, no special security rule, no conditional-debt liability exclusion, and no later payment retest for such debt. Section 351.180 preserves class or series rights in dissolution or an asset distribution, and §§ 351.180 and 351.220 use involuntary-liquidation preferences when specifying share terms and valuing certain own-share dividends.

Those references do not decide a liquidation, insolvency, liability, creditor- recovery, fraudulent-transfer, bankruptcy, covenant, fiduciary, tax, accounting, or valuation issue.

What trips people up

• Declaration is not the only test point. Section 351.220 bars both declaring and paying a dividend while the net-assets floor is not met.
• Paid-in surplus carries an extra class safeguard. Accrued cumulative preferred dividends must be fully paid before a § 351.210 distribution to any class.
• A stated-capital repurchase is not tested like a surplus repurchase. The former invokes the remaining-assets debt safeguard and retires the shares; § 351.200 separately permits a surplus route.
• Scrip is not a fractional share. A fractional-share certificate carries shareholder rights; scrip has no dividend or other shareholder rights unless the board's resolution supplies them.

Common questions

Does Missouri use a 120-day authorization-to-payment rule?

No such rule appears in RSMo §§ 351.200–351.220. The dividend section instead prohibits both declaration and payment when its net-assets condition is not met.

Must shareholders approve an ordinary dividend?

The surveyed provisions assign declaration to the board and state no general shareholder-approval step. The articles, class or series terms, and validly delegated committee authority still must be checked.

Is a stock split treated as a share dividend?

Not when it is a split-up or division of issued shares into a greater number of shares of the same class. RSMo § 351.220(6) expressly excludes that transaction from its share-dividend meaning.

Statutes and sources

• RSMo § 351.015(6), (11)–(12), (15)–(17) — domestic corporation, net assets, paid-in surplus, shareholder, shares, and stated capital. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo § 351.180(1)–(4) — class and series terms, redemption consideration, dividend preferences, and dissolution or asset-distribution rights. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo § 351.200(1)–(2) — stated-capital and surplus purchase or redemption routes and the remaining-assets debt safeguard. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo § 351.210 — cash or in-kind paid-in-surplus distributions, cumulative preferred-dividend condition, and stated-capital floor. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo § 351.220 — board declaration, dividend forms, net-assets floor, share-dividend capital transfers and disclosure, split exclusion, and article restrictions. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo § 351.250 — transfer-book closure and dividend-payment record date. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo § 351.300 — fractional shares, cash, scrip, and attached rights. Official Missouri Revisor text (accessed 2026-09-03).
• RSMo §§ 351.310 and 351.330 — board management and delegated committee authority. Official Missouri Revisor text (accessed 2026-09-03).