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Q：
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What is a dividend?
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A：
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A dividend refers to the distribution of the company's net earnings that is paid out to shareholders based on their ownership stake.
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Q：
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Under what circumstances can dividends be paid?
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A：
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A company can only distribute profits to its shareholders if it is financially solvent. Financial solvency is determined by the company's ability to repay its debts within one year after distributing dividends.
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Q：
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Who have the power to declare dividend?
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A：
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For companies with a constitution, the board is responsible for authorising interim dividends, while shareholders are responsible for approving final dividends.
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For companies without a constitution, the board must approve dividend payments, regardless of whether they are interim or final dividends.
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Q：
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What are the advantages of paying dividend?
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A：
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Encourage shareholders to hold onto their shares;
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Dividends offer assurance regarding the company's financial health;
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Attract additional investors and generate demand for the company's shares; and
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Distributing dividends conveys a strong message about the company's outlook, performance, and underscores its financial stability.
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Q：
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What are the procedures for dividend payment?
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A：
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Verify if the company has adequate profits to declare the dividend and ensure sufficient funds in the bank account for the payment.
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Establish the dividend payment date.
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Prepare a 12-month cash flow forecast or other solvency test to confirm the company's solvency immediately after distributing the dividend.
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Directors or shareholders must pass a resolution to approve the dividend declaration, entitlement date, and payment date.
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The company secretary is responsible for issuing dividend vouchers and cheques to shareholders on the payment date.
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Review the bank statement to identify any unclaimed dividends.
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FAQ
