Form of dividend waiver

Deed of Dividend Waiver

CO.DIVI.04
A shareholder is entitled to waive his right to a dividend. SME businesses in particular may choose to waive their rights to dividends in order to retain money in the business. This Deed of Waiver can be used by shareholders to formally notify the company of their decision to waive their entitlement to a dividend.

Only a shareholder can waive his entitlement to a dividend and a waiver may cover a single dividend or a series of dividends within a specified time period. A waiver must be a formal deed and therefore it must be signed, dated, witnessed and sent to the company. The waiver must be received by the company before the right to the dividend arises and should also state the reason why the dividend is being waived. There must be a genuine commercial reason for it, e.g. enabling the company to retain funds for a specific purpose, in order to prevent HMRC considering the process one of income shifting or diverting otherwise taxable income. Further details regarding what dividends are and the process of waiving a dividend are available in our Guidance Note: Dividends.

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.

This Deed of Waiver is 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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