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If these companies aren't allowed to pay a dividend until they have paid back the government aid, isn't the government effectively taking an ownership stake?
by barbegal 7y ago
If these companies aren't allowed to pay a dividend until they have paid back the government aid, isn't the government effectively taking an ownership stake?
- dkural 7y agoNo it's not. The government won't own any shares that benefit from an increase in share price, nor will they receive dividends. The government can only receive the government aid back. It works as a forgivable loan. Loan-holders almost always come before equity-holders, and they could require full payment before dividends to equity holders.
- lidHanteyk 7y agoIdeally, as grandparent notes, yes. But no, there's an obvious way out: Instead of paying dividends, reinvest would-be outgoing cash back into the company. On the phone, claim to follow the Amazon playbook. In addition to not having to give up anything to the government, the company might find itself improving!