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1. How many stages are there until a dividend is really paid to the shareholders?
2. Is it true that dividend is proposed at AGM by the shareholders because the directors are not in a position to propose it because they do not know the actual profits until the year-end when they will know?
3. Then dividend is declared by the voting of the shareholders at the same AGM; They will decide the percentage of dividend declared in this meeting, are not they?
4. The dividend will finally be paid at the year-end once the directors will know the actual profit figures but can they not pay the same amount set in the declared dividend at the AGM; if they have not earned enough profits during the year?
5. Is it also true that dividend is normally paid in the following year but what is the reason for that?
6. Can directors pay all the net profits as dividends to the shareholders and retain no profits?
7. The dividend will be recorded in the books once they are paid at the year end, isn’t it?
8. Do Shareholders set the percentage or amounts to be paid as dividend at AGM?
9. Is it also correct that dividend is recorded in Statement of changes in equity only where not record will be made in SOPL or SOFP; is that correct?
1 The directors propose the amount of the final dividend to be paid. The shareholders vote on it. Then it is paid.
2. The dividend is proposed by the directors. It is proposed after they know the profits for the year. The AGM is held after the end of the financial year.
3. The shareholders decide whether or not to accept the dividend proposed by the directors (and usually this is a formality and the proposed dividend is accepted).
4. The AGM is held after the end of the year when the profits for the year are known.
5. Interim dividends are paid during the year. The final dividend is paid after the end of the year when the profits are known and the dividends has been voted on in the AGM.
6. The directors propose the amount of the dividends but the shareholders vote as to whether or not to accept their proposal. By law the maximum dividend that can be paid is the total of the retained earnings (i.e. all profits (including past profits) that have not previously been distributed as dividend.
7. Dividends are recorded when they are actually paid.
8. Again, the directors propose the amount of the dividends but it is the shareholders who vote as to whether or not to agree the proposal.
9 When the dividend is paid it is recorded in the Statement of changes in equity where it reduces the Retained Earnings. The balance remaining on Retained Earnings (i.e. the Revenue Reserve) appears on the SOFP.
Have you watched my free lectures on Limited Companies. Everything relevant to Paper FA is covered in my free lectures (the date of the AGM etc. are more relevant to Paper LW as they relate to Company Law.)?
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