Board Minutes to approve Dividend (companies with modified model articles)
In order to pay a dividend companies must hold a board meeting where the directors may, if permitted by its articles of association, recommend and declare a dividend. This template board minute can be used to record the directors’ recommendation, declaration and payment of a dividend (without recourse to shareholders).
The process of recommending and declaring a dividend is largely governed by a company’s articles of association. For many SME companies this may only involve a board meeting of the directors as the company’s articles will either expressly state that the directors may recommend and declare dividends (final as well as interim), or are silent on the point. This board minute has been drafted on this basis.
However note that if a company has unmodified model articles for a private company, i.e. Article 30 of the model articles is still in place; it is generally accepted practice that whilst directors can resolve to recommend a dividend, a final dividend should be declared by shareholders via ordinary resolution at general meeting or by way of written resolution. If this is the case, our alternative board minute for companies with model articles should be used instead.
In contrast interim dividends are usually decided solely by the board of directors whether the company has model articles or not. This board minute may therefore be used to recommend and declare an interim dividend, notwithstanding what type of articles a company has. Further details regarding what dividends are and the process for declaring and paying them are available in our Guidance Note: Dividends .
Once a board agrees to distribute dividends, this fact must be recorded. These board minutes can be used as a record of a dividend payment and kept as part of the company’s general records in case they are subsequently required by HMRC as evidence that a dividend was properly recommended and declared.
These Board Minutes go through the procedural requirements that the board will need to follow during the process of recommending and declaring a dividend and are in open format. The requisite details should be inserted into the highlighted fields or the wording can be adjusted to suit your purposes. Wording in square brackets is optional. If it is required, then the brackets should be deleted and the wording within them retained. If the wording is not required, then it can be deleted.
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