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Distributions - Coggle Diagram
Distributions
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Cash dividend
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The declaration and payment of a dividend is subject to the availability of profit and any restrictions in the Articles, at the directors discretion
Interim dividends require no additional authority but final dividends require the approval of the members by ordinary resolution
Companies are still required to confirm the amount of tax deducted on dividend payments. This notification is called the dividend confirmation
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By investment companies
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The principal one being the company's assets must represent at least 150% of the value of its assets after the distribution
By public companies
CA2006 places additional restrictions on the ability of a public company to make a distribution in circumstances where the following criteria are met
If the amount of its net assets is not less than the aggregate of its called up share capital and undistributable reserves
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Distributions are defined as 'every description of distribution of a company's assets to its members whether in cash or otherwise
CA2006 s.830 states that a company may only make a distribution out of profits available for that purpose, more commonly referred to as distributable profits. These are the company's accumulated realised profits less its accumulated realised losses
If the last annual accounts do not show that there is sufficient distributable profit, the directors can prepare interim accounts to justify the amount of the distribution
If the annual accounts have a qualified auditor's report, the auditor must issue a statement confirming whether the qualification is material for determining if a distribution can be made
If a public company needs to prepare interim or initial accounts, those accounts must be properly prepared in accordance with CA2006
Where interim accounts are prepared, these must be signed and a copy filed with the Registrar
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