Q&As

Can a company registered in the UK declare or pay a dividend in a currency other than pounds sterling?

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Published on LexisPSL on 28/06/2019

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Can a company registered in the UK declare or pay a dividend in a currency other than pounds sterling?

Can a company registered in the UK declare or pay a dividend in a currency other than pounds sterling?

A dividend is a type of distribution made by a company to its members. The Companies Act 2006 (CA 2006) governs how a company may make distributions in CA 2006, Pt 23 (CA 2006, ss 829–853). A distribution will be unlawful if it does not comply with the requirements of CA 2006, Pt 23 and the applicable common law rules as modified by those provisions.

In addition, there are normally detailed provisions relating to dividends in a company’s articles of association. Such provisions in the company’s articles will bind the company in question unless amended, removed or waived.

A company’s articles typically provide the company with the power to pay dividends and set out when, and how, dividends can be declared and paid. In particular, it is usual for them to provide that:

  1. the directors may recommend a final dividend (ie one to be paid after the financial year to which the profits being distributed relate), which is then declared by the approval of the members, usually by ordinary resolution, the amount declared not exceeding the amount

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