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Distribution of Assets to Shareholders

Distributing Assets to Shareholders

Circumstances may arise in which your company wishes to distribute assets to shareholders as well as, or instead of, dividends.

Assets such as properties and separate businesses can be transferred to shareholders either by way of a non-cash dividend or as a form of demerger.

Assets can also be distributed on a winding-up of the company under a statutory procedure but legal and tax advice should be sought.

If you give cash or assets to shareholders at less than their value, care should be taken as the transaction may be treated as a disguised dividend, in which case the benefit will be taxed as if it were a dividend.

Equally, if you impose management charges on subsidiaries within your group of companies, take care to ensure that the arrangement is documented and commercially justified, otherwise payments may again be treated as dividends with possible tax implications for the benefit transferred.

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