- 43 -
Massachusetts law, title to the cash passed to CV by the close of
CVI's relevant taxable years.
The fact that the dividends received by CV were not declared
by the directors of CVI until after the close of CVI’s relevant
taxable years also does not prevent us from concluding that
dividends were effectively paid by the close of those years. As
a general matter, Massachusetts law provides that no dividend can
arise, and shareholders have no right to, or interest in, the
accumulated earnings of a corporation, until the authorized
representatives of a corporation vote to declare a dividend.
Galdi v. Caribbean Sugar Co., 99 N.E.2d 69, 71 (Mass. 1951);
Willson v. Laconia Car Co., 176 N.E. 182, 184 (Mass. 1931);
Joslin v. Boston & M.R. Co., 175 N.E. 156, 158 (Mass. 1931);
Anderson v. Bean, 172 N.E. 647, 652 (Mass. 1930). Although the
distribution of dividends by CVI had not been formally authorized
by the close of its relevant taxable years, an act performed
without authority may be ratified if it could have been
authorized at the time it was performed. It has generally been
held that ratification of an act relates back to the time at
which the act was performed and is equivalent to prior authority
for the act, unless the rights of third parties have intervened.
Tarrants v. Henderson County Farm Bureau, 380 S.W.2d 274, 277
(Ky. 1964); Phillips v. Colfax Co., 243 P.2d 276, 281 (Or. 1952);
Hannigan v. Italo Petroleum Corp. of America, 47 A.2d 169, 171-
173 (Del. 1945); see generally 18B Am. Jur. 2d, Corporations,
secs. 1635-1660, 1657-1658 (1985); 2A Fletcher Cyclopedia of
Page: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 NextLast modified: May 25, 2011