Ordinary Resolution - Dividend in Specie

A dividend in specie (also known as a “dividend in kind”) is a distribution of a particular asset (or assets) to shareholders as an alternative to a cash dividend. It often involves the transfer of an asset such as property, an investment or equipment.

When is a shareholder resolution needed for a dividend in specie?

There is no requirement for cash dividends to be declared by shareholders at a general meeting. However, a company must have the relevant authority to pay a dividend in specie.

In the absence of any express authority, the dividend must be paid in cash.

Model Articles authority: Article 34

Article 34 of the Model Articles for private companies limited by shares allows non-cash dividends to be declared, subject to shareholder approval by ordinary resolution on the recommendation of the directors.

What this ordinary resolution does

This shareholders’ ordinary resolution contains wording that may be used to approve a dividend in specie where the company declares a specified cash amount to be satisfied by the transfer of non-cash assets of equivalent value.

This resolution assumes the company’s articles include Article 34 (or equivalent wording).

Ordinary Resolution - Dividend in Specie is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.