A shareholder distribution is a payment or transfer of value that a company makes to its shareholders because they are its owners, as opposed to a payment for goods, services or loans. The most familiar form is the cash dividend, whether regular or a one-off special dividend. Other forms are a share buyback, a return of capital, a distribution of assets or of shares in a subsidiary, and the final liquidation distribution when a company is wound up.
Company law limits distributions in order to protect creditors. In the United Kingdom and many other countries, a company may distribute only accumulated realised profits, broadly its retained earnings, and directors who authorise an unlawful distribution can be personally liable. US state laws generally apply solvency tests instead. Banks and insurers face further limits tied to their capital buffers. For accounting purposes, distributions are deducted directly from equity and are not an expense.