Blocked Cash

Cash surplus to a businesses requirements but unable to be used.

Blocked cash often arises when a group has an offshore subsidiary which has accumulated cash as profits or through the sale of capital assets but is not permitted to distribute it to its parent as a dividend, loan repayment, interest, or capital reduction.

Outside of regulatory disputes, cash becomes blocked because it is the host country's intention that surpluses be used for re-investment in the country. This is a trap which can be suffered in emerging markets where offshore investors had assumed that the domestic economy would develop to enable free movement of capital or to provide further investment opportunities to develop distributable profits.