Dividends and distributions
Dividends and distributions

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

  • Dividends and distributions
  • What is a distribution?
  • What is a dividend?
  • Restrictions on distributions
  • Financial requirements on a distribution
  • Procedure for the declaration and payment of dividends
  • Tax treatment of a dividend
  • Capitalisation of profits and reserves and bonus issues of shares
  • Unlawful distributions

The law regulating the making of distributions by a company, as it applies to all companies, is set out in this Practice Note. For details of the additional rules and guidance that specifically apply to listed companies and AIM companies, see Practice Note: Dividends—listed and AIM companies.

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

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