Retained Unrestricted Earnings Law and Legal Definition

Retained unrestricted earnings is a term used in the corporate world to refer to profits a business has accumulated since its creation that it has not distributed to stockholders as dividends. The SEC defines it as the amount of accumulated profits and gains realized out of the usual and continuous operations of the company after deducting distributions to stockholders and transfers to capital stock or other accounts, and which is: (1) not appropriated by its Board of Directors for corporate expansion programs or projects ; (2) not covered by a restriction for dividend declaration under a loan contract; and (3) not required to be retained under special circumstances, such as when a special reserve for likely contingencies is needed.