| Commentary

181 Declaration of dividends

| Commentary

181 Declaration of dividends

Dividends can only be made out of profits available for the purpose of the distribution1. A company’s profits available for distribution are ‘its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made’2. The Companies Act 2006 does not define the meaning of ‘realised profits’3. These rules concerning the distribution of a company’s profits clearly reflect the intention of the legislature to protect the interests of creditors and not merely the interests

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