PROCEDURE PLAN
Declaring and Payment of a Dividend
Board Meeting 1
Prior Directors may only recommend a dividend if there are “profits available” (CA 2006, s830).
Not from capital, only profits.
I.e. what are the realised profits of the company for the year to date minus the realised losses for
the year to date? If losses exceed profits, there are no “profits available” to pay a dividend.
If Directors recommend a dividend when there were no profits available, they may be
personally liable to repay those dividends to the company
The Dividend is normally expressed as a figure of “X”p per £1 share owned.
Call MA 9: Any director or authorised company secretary can call
Apply to facts
Notice MA 9: Notice must be given to each director, wherever he is, and need not be in writing.
Contents must include MA9(2): Proposed date and time, location, how the directors will communicate if not
in same place.
The notice itself must be reasonable which is what is usual (Re Homer)
Apply to facts – if small company, what is usual is often same day
Interest s177: Interested directors must make a declaration
Apply to facts and look to exemptions – if directors already aware s177(6)(b)
MA14: Interested directors do not count in quorum nor can they vote
Apply to facts – even if didn’t make declaration won’t be able to count/vote - only for resolutions
they’re interested in
Quorum MA11: Any two of the directors
Is this going to be satisfied? Do we know who is attending?
Say we need at least X and Y – take into account interests – say bare minimum
Resolutions 1 MA30(2): BR to recommend dividend and decide on maximum amount
If the Directors do recommend a dividend, the shareholders get the final say (by OR – MA30(1))
as to whether to actually pay this and how much (though they cannot exceed the director’s
recommended maximum)
2 s302: BR to call a GM by BR OR s291 BR to propose a written resolution
Voting MA7: Show of hands by simple majority – more than 50%
State how the decision would pass with what exact directors are needed
MA13: If deadlock, Chair can use their casting vote
Is there a chair? Remember that, practically, avoid doing this – too authoritative
Admin s248/MA15: Directors board minutes/written record of each BR must be kept for 10 years at
company’s registered office or SAIL
1
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