Agreement Interim Dividend

The company`s articles of association usually contain explicit provisions regarding the payment of dividends and, if there is a shareholders` agreement, it should also be reviewed if it contains a dividend policy. Once a dividend has been declared by the shareholders, the company is required to pay it either immediately or (if the shareholder`s decision so provides) at a future date, as indicated in the decision. This also falls under the articles of association of the company, which may provide that dividends may be paid by bank transfer, cheque or by any other means that may be agreed with the shareholder concerned. There are two types of dividends: between and permanently. Interim dividends are those paid throughout the year (monthly, quarterly, annual, etc.). Before declaring an interim dividend, directors must ensure that the financial situation of the company justifies the payment of such a dividend on the profits available for distribution. The general meeting may not intervene in the exercise of the power of the directors to pay interim dividends. Note that HMRC considers the date of payment of interim dividends as the date of entry in the company`s accounts. GM 20095 (8) The final dividend is paid once a year at the end of each year. If a final dividend is paid and the decision sets a later payment date, the declaration creates a debt to the shareholder. However, the shareholder may not take any action to enforce the payment until the due date of the payment (or fixed-rate payment, see Potel v CIR (1971).

In such circumstances, the „due date“ is the date set for payment and not the date of the return. Before declaring a dividend, the company`s directors must hold a meeting of the board of directors and keep the minutes of the meetings (in paper or electronic form) with their legal records (CA 2006 s388). Here is an example of the Board Meeting Minutes. The payment of a dividend depends on the articles of association of a company. Unless otherwise stated, this is done in accordance with paragraphs 30 to 31 of Schedule A. Companies Act 2006 [CA 2006 (s830)] according to which „an enterprise may earn only one distribution available for that purpose“. This means that the entity must have sufficient deposit profits (accumulated realized profits minus accumulated realized losses) to cover the dividend at the time of payment. The management and declaration of dividends is one of the most common and important functions of a company secretary. This can be a complex and technical area and here we have presented a high-level guide to the most frequent reflections on dividends.

We also offer written resolutions allowing you to document declared dividends. In order to be able to properly declare and distribute a dividend, certain conditions must be met, including: if no final dividend has yet been paid, directors can withdraw their recommendation, which may be enough to stop the process. A word of caution, but this withdrawal of recommendation will only be effective if the recommendation of the directors is a prerequisite for the power of the members to declare the dividend according to the articles of association of the company. Without this condition, directors would have to consult with members prior to any declaration and obtain an agreement not to declare or delay the dividend. When reviewing the payment of dividends, directors should ensure that they receive adequate advice from the company`s accountants and comply with the applicable provisions of the company`s articles of association. . . .