If companies make a profit, they are free to distribute these funds to shareholders; however the process of recommending and declaring dividends before they are paid must be strictly adhered to. As the Companies Act 2006 is largely silent on this, it is a company’s articles of association which must be consulted as to the relevant process and importantly whether shareholder approval is required following the dividend’s recommendation by the directors.
This month the Paying Dividends sub-folder has been updated to refresh the package of templates to cover the different processes of recommending and declaring dividends depending on whether a company has retained or revised the model articles of association for private limited companies.
The new and updated package includes:
1. revised and updated guidance notes on dividends and specifically in relation to final and interim dividends and how dividends should be recommended and declared depending on the company’s articles of association;
2. updated board minutes for companies with modified articles of association;
3. new board minutes for companies with model articles of association;
4. a shareholders’ ordinary resolution to declare a dividend;
5. a written resolution to declare a dividend; and
6. general meeting minutes to declare a dividend.
These templates form part of our Making Changes to Share Capital group of documents and are designed for a company secretary, company administrator or a company director undertaking the company secretarial role in a small private company.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.