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Corporations Bill 2001

Part 2H.5 Dividends

   

254T   Dividends to be paid out of profits

                   A dividend may only be paid out of profits of the company.

Note:          For a director’s duty to prevent insolvent trading on payment of dividends, see section 588G.

254U   Other provisions about paying dividends (replaceable rule—see section 135)

             (1)  The directors may determine that a dividend is payable and fix:

                     (a)  the amount; and

                     (b)  the time for payment; and

                     (c)  the method of payment.

The methods of payment may include the payment of cash, the issue of shares, the grant of options and the transfer of assets.

             (2)  Interest is not payable on a dividend.

254V   When does the company incur a debt?

             (1)  A company does not incur a debt merely by fixing the amount or time for payment of a dividend. The debt arises only when the time fixed for payment arrives and the decision to pay the dividend may be revoked at any time before then.

             (2)  However, if the company has a constitution and it provides for the declaration of dividends, the company incurs a debt when the dividend is declared.

254W   Dividend rights

Shares in public companies

             (1)  Each share in a class of shares in a public company has the same dividend rights unless:

                     (a)  the company has a constitution and it provides for the shares to have different dividend rights; or

                     (b)  different dividend rights are provided for by special resolution of the company.

Shares in proprietary companies (replaceable rule—see section 135)

             (2)  Subject to the terms on which shares in a proprietary company are on issue, the directors may pay dividends as they see fit.

No liability companies

             (3)  A person is not entitled to a dividend on a share in a no liability company if a call:

                     (a)  has been made on the share; and

                     (b)  is due and unpaid.

             (4)  Dividends are payable to the shareholders in a no liability company in proportion to the number of shares held by them, irrespective of the amount paid up, or credited as paid up, on the shares. This subsection has effect subject to any provisions in the company’s constitution relating to shares that are not ordinary shares.