View Full Version : dividend question

Mark Snowdon
29th February 2004, 17:59
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
29th February 2004, 21:26
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
1st March 2004, 12:32
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
1st March 2004, 14:03
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.