180 Introduction

The position on payment of dividends differs significantly depending upon whether the company is public or private. Unlike public companies, it is extremely unusual for private companies to declare dividends, their profits instead being distributed as remuneration to the directors. A company is under no legal obligation to distribute profits in the form of dividends or otherwise, so this practice is not inconsistent with the provisions of the Companies Act 2006, provided that all the shareholders are also directors1.

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