Having watched shark tank, I’m curious how dividends work in small companies. I know the show is nothing like reality, it was just the basis for this question.
If I have a company I had two different early investors- one who has a 10% share and one who has a 15% share, who determines when dividends can be drawn?
If my company gets to a point where it’s earning enough revenue to net 100k profit after reinvesting for growth, what’s to stop me from issuing myself a 100k salary instead of receiving profit in terms of dividends?
In: Economics
A lot of times, nothing. You need to be very careful being a minority investor in a small company. Read the shareholder agreement carefully. Small companies are very hard to valuate, and it’s hard or impossible to sell your shares.
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