dividend question

[Mark Snowdon]

Just a quickie - Is there any rule against paying a dividend greater than the profit ? plc's do it so I assume its OK.

the company will have minimal trade this year but is cash rich - I intend to just take a dividend to extract some of the cash, then close it with a capital distribution - S220 or something ?

I seem to remember seeing some warning somewhere that the company can get classed as an investment vehicle and this is a bad thing ?

[www 1staccountancy biz]

The main problem arises when the company declares a dividend greater than the distributable reserves...i.e the retained profits shown on the balance sheet.

[Mark Snowdon]

thanks

cheers Darren

I cant see myself declaring a divi of more than I have - presumably that happens when people are trying to give everything to a minority shareholder through a divi ?

[www 1staccountancy biz]

Re: thanks

I've seen it happen a few times where people think that they've made a lot enough during the year when on paper they haven't, so take out more than they have really earned.