can capital reserve be used to pay divedends to shareholders?

Question

in terms of the topic finance

Answer 1

Yes.

While rules vary from country to country, there are many countries that allow companies to pay dividends from capital reserves.

In the US, it is allowed. For example, General Motors - which has long been generating losses - still pays out a dividend.

Other countries limit the payment of dividends subject to it being in specific accounts of owners' equity (e.g. retained earnings) and some countries are even more conservative by allowing dividends only subject to dividends being paid when the earnings allow it.