How does a company decide how much to pay in dividends, and how?

Under the Commercial Act, a company may pay dividends up to the amount of net assets on its statement of financial position less capital stock, accumulated capital reserves and earned surplus reserves, the earned surplus reserve to be set aside for that fiscal period, and unrealized gains.

In principle, dividends are decided by resolution of the general meeting of shareholders, but where the board of directors approves the financial statements, they are decided by board resolution. If dividends are paid in excess of the limit, the company's creditors may demand their return.