Flow chart - pay a company dividend

A dividend is a distribution of a company’s profits. There are two types of dividend: interim and final. A company is not obliged to pay a dividend but when it does it can choose to pay either type.

Flow chart

A final dividend for a financial period must be approved by a shareholders’ majority and follow approval of the company’s accounts. An interim dividend can usually be paid solely on approval by the board of directors unless prohibited by the company’s articles of association.

A company can pay a dividend any time when the right conditions exist. Our Flow Chart - Pay a Company Dividend will help you through the process.

A dividend should be proposed at a rate per share, e.g. £10 for each ordinary share, and must be paid to all shareholders who own shares of that class, e.g. ordinary shares, preference shares etc. unless they have already waived their rights to dividends.

Definitions for the flow chart:

• Reserves, sometimes referred to as retained profits, means accumulated profits of the company which have not been distributed by dividend or other means. The figure can be found near the bottom of the balance sheet of the company’s accounts
• Board minute is a written record (handwritten or digital) of a decision, action or resolution made by the board of directors.

Documents

Several of our documents will assist with payment of a dividend. Especially useful are the Minute of Board Resolution to Pay Interim Dividend; Minute of Board Resolution to Recommend Final Dividend and Company Dividend Voucher.