Arkansas Code
Subchapter 6 - Corporate Finance
§ 4-26-619. Dividends other than in shares of the corporation

In respect to all dividends payable by a corporation other than dividends payable in its own shares:
(1) Subject to subdivisions (3) and (4) of this section, these dividends shall be payable only:
(A) Out of the unreserved and unrestricted earned surplus of the corporation; or
(B) Out of the capital surplus other than revaluation surplus of the corporation, but dividends from capital surplus may be paid only if there is no unreserved and unrestricted earned surplus and then only to shares entitled to cumulative preferential dividends, and no capital surplus paid in by any class of stock may be used for the payment of dividends on any class junior thereto; or
(C) Out of the corporation's net profits for the fiscal year then current.

(2) No dividend may be declared or paid if there are reasonable grounds for believing that upon the payment:
(A) The liabilities of the corporation would exceed its assets; or
(B) The corporation would be unable to pay its obligations to creditors as they become due in the ordinary course of business; or
(C) The highest liquidation preferences of shares entitled to such preference over the shares receiving the dividend would exceed the corporation's net assets; or
(D) The payment of the dividend would be contrary to any provision of the articles of incorporation.

(3) Except to the extent prohibited by its articles of incorporation, a corporation engaged solely or substantially in the exploitation of mines, timber, oil wells, gas wells, patents, or other wasting assets, or organized solely or substantially for the liquidation of specific assets, may, for the purpose of determining its right to pay dividends, compute its earned surplus or net profits without deduction for the depletion of assets incidental to the exploitation or liquidation or lapse of time.
(4) Notwithstanding any provision of this chapter to the contrary, a corporation engaged primarily in the holding or sale of securities may, subject to the restriction contained in subdivision (2) of this section, pay to the holders of common or preferred stock a dividend from revaluation surplus represented by appreciation, readily ascertainable and realizable in cash, in the value of securities held by the corporation; but such dividend may be paid only after the board of directors shall have determined, with the determination to be included in the resolution authorizing the dividend, that the assets of the corporation remaining after the payment of such dividend have a fair value which is not less than one and one-fourth (1¼) times the amount of its liabilities to creditors.
(5) In respect to each dividend payable to the holders of preferred stock out of capital surplus as permitted under subdivision (1)(B) of this section, or payable without deduction for depletion as permitted under subdivision (3) of this section, or payable out of unrealized appreciation as permitted in subdivision (4) of this section, concurrently with the payment of the dividend, the corporation shall disclose to each shareholder receiving a dividend the source from which the dividend is paid; and the source from which the dividend is paid shall also be shown on all notices, reports, and statements which contain a reference to such dividend.
(6) Notwithstanding any other provision of this chapter, in any situation where as much as ninety-five percent (95%) of the capital stock of a corporation is owned by one (1) or more other corporations, the corporation whose stock is so owned may pay dividends out of its assets in excess of its liabilities to creditors regardless of the effect of such dividends upon the stated capital account, provided the assets remaining after such dividends shall have a value of at least one and one-fourth (1¼) times the amount of such corporation's liability to its creditors and provided further such dividends will not impair such corporation's ability to pay its debts as they mature.