Week 13 - Dividend Payments

Question 1

A company may not make a distribution to members except…

Answer 1

Except out of distributable profits

Question 2

But, there is no rule that…

Answer 2

Profits HAVE to be distributed

Question 3

When are dividends only payable?

Answer 3

When the company has ‘declared’ a dividend

Question 4

Payment by the company of an unlawful decision to one of its shareholders can result if the shareholder…

Answer 4

If the shareholder, at the time of the distribution, knew or had reasonable grounds to believe that the distribution was unlawful, he is required to repay it to the company

Question 5

Who decides the value of the dividend?

Answer 5

The company and its directors, not the shareholder

Question 6

What can result in unlawful distribution?

Answer 6

If companies are found to have paid a dividend (perhaps because it’s directors that are the shareholders), when that year there was not enough to do so

Question 7

A failure to pay a dividend could constitute…

Answer 7

Could constitute unfairly prejudicial conduct, or possibly justify winding up on just and equitable ground