The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Distributions
  • What is a distribution?
  • Interpretation of 'distribution'
  • ICAEW guidance on distributions
  • Intra-group guarantees and intra-group loans as distributions—the market view
  • Interpretation of 'members'
  • Bonus issue of shares
  • Reduction of share capital
  • Redemption of shares and share buyback
  • Distribution on the winding up of a company
  • More...


The law and practice relating to distributions made by a company, as it applies to all types of company, is set out in this Practice Note.

A dividend is a type of distribution made by a company to its members. In relation to the law and practice relating to the payment of dividends, see Practice Notes: Dividends—the legal framework and Distributions. For details of the additional rules and guidance that specifically apply to dividends paid by listed companies and AIM companies, see Practice Note: Dividends—listed and AIM companies.

Other aspects of the law relating to dividends are considered in Practice Notes: Scrip dividends and Waiver of dividends.

What is a distribution?

‘Distribution’ is given a very wide definition for the purpose of Part 23 of the Companies Act 2006 (CA 2006).

A distribution is every description of distribution of a company’s assets to its members, whether in cash or otherwise, except:

  1. an issue of bonus shares (whether fully-paid or partly-paid), and

  2. certain:

    1. reductions of share capital

    2. redemptions of shares

    3. share buybacks, and

    4. distributions of assets to members on the winding up of a company

There is no definition of 'asset' in CA 2006, although there is a definition of 'non-cash asset', being any property or interest in property other than cash. In CA 2006, 'cash' is expressed to include foreign currency.

Interpretation of 'distribution'

A monetary payment or the transfer of a

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