The dividends rights clause gives the directors the power to declare dividends, and sets out the rights of the various share classes to receive dividends. An important feature of the clause is whether the directors are obliged to declare dividends for the shares of any given class, whether the rights to receive dividends are cumulative (accumulate from year to year), and whether dividends must be declared for any or all classes of shares at the same time. In this clause, the directors can declare dividends, but are not obliged to do so in any given year. If the directors do not declare dividends, the shareholders have no right to claim that they were entitled to receive dividends for that year. If dividends are declared, they can be declared independently for the various share classes, which means that dividends can be declared for a class of shares without having to be declared for any other class of shares. This type of dividend clause does not offer any assurance to shareholders that they will receive dividends in any given year, unless they control the board of directors.When is shareholder no longer entitled to dividends?Shareholders will lose dividend rights when the shares are sold, transferred, or redeemed/retracted. At this point the dividend right either transfers to the new holder of the shares, or if the shares are redeeme/dretracted by the company for the purpose of cancellation, those rights are extinugished.