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Dividend payments

It is important for directors and company secretaries to be aware of the complex procedural rules and legal restrictions on paying dividends. This eBook looks at the steps involved in paying dividends and the rules that restrict the amounts companies can pay out. It also includes additional considerations for publicly traded companies, special kinds of dividends and alternative ways of returning cash to shareholders.

ICSA Solutions

ICSA Solutions are an innovative series of ebooks that provide immediate access to all the necessary information on a particular topic; offering practical guidance, case studies and time-saving checklists.

Dividend payments

William Buckley, Lucy Fergusson, Vonetta Dale and Philippa Gavey
ICSA Publishing Ltd, 2013

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1. How to pay a dividend

Chapter 1 focuses on the procedure for paying cash dividends including the power to decide upon a dividend, a company's obligation to pay and to whom and how much, method of payment, accounting for dividends, tax treatment of cash dividends and waivers and unclaimed dividends.

2. What are the limits on paying dividends

Chapter 2 look at the statutory, common law and other restrictions on companies paying dividends. It includes sections on investment companies, long-term insurance businesses and community interest companies. The consequences of unlawful distributions and remedies are also covered.

3. How are distributable profits calculated?

Chapter 3 covers the technical rules on determining realised profits and losses for the purposes of determining the amount of profits that a company may legally distribute.

4. Dividend payments by publicly traded companies

Chapter 4 looks at the key rules that apply to companies trading on AIM or the Main Market of the London Stock Exchange with regards to dividend payments. It includes the operation of scrip dividend and dividend reinvestment plans.

5. Special dividends and non-cash distributions

Chapter 5 covers other kinds of distributions including preference share dividends, special dividends, pre-sale dividends or dividend strips, dividends in kind and intra-group transfers.

6. Other ways of returning cash to shareholders

Chapter 6 considers other methods of returning cash to shareholders including share buybacks and capital reorganisations.

Practical tools and other customisable content

This publication includes the following customisable content:

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You are permitted to view, print and download this eBook for your personal use. Unless you have the permission of the copyright owner, you may not re-transmit the publication to anybody else.


This publication is the copyright of ICSA Publishing Ltd.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission, in writing, from the publisher. This publication is a general guide and is correct at the time of writing.


The publication does not necessarily deal with every important topic or cover every aspect of the topics with which it deals. It is not intended to provide legal advice and should not be treated as a substitute for legal advice. Legal advice should always be sought before taking action based on the information provided. The authors bear no responsibility for errors and omissions.

The Institute of Chartered Accountants in England and Wales (as distributor) disclaims all liability for any errors or omissions.