Deed of Dividend Waiver

A shareholder is entitled to waive their right to a dividend. SMEs, in particular, may choose to waive dividends so that money can be retained in the business. This deed can be used by a shareholder to formally notify the company that they are waiving their entitlement to a dividend.

What this Deed of Dividend Waiver does

This deed provides a formal written waiver from a shareholder. A waiver may relate to a single dividend or a series of dividends within a specified time period.

Key legal and practical points

• Only a shareholder can waive their entitlement to a dividend.
• The waiver must be a deed, so it must be signed, dated and witnessed, and sent to the company.
• The waiver must be received by the company before the right to the dividend arises.
• The waiver should state the reason for the waiver and there must be a genuine commercial reason (for example, enabling the company to retain funds for a specific purpose), to help avoid HMRC treating the arrangements as income shifting or diverting otherwise taxable income.

Further guidance

Further details on dividends and the process of waiving a dividend are available in Guidance Note: Dividends.

Drafted as a deed

This template has been drafted as a deed and is a legally compliant form of waiver that companies would expect to receive from shareholders considering a dividend waiver.

Deed of Dividend Waiver is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.