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Unlawful Dividend consequences

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Unlawful Dividend consequences

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by AvatarMikeLittle.
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  • January 3, 2020 at 8:03 am #556736
    Avatarkizikyon
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Dear Sir,

    kindly explain he consequences of the unlawful dividend?

    January 4, 2020 at 9:13 am #556814
    AvatarMikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23368
    • ☆☆☆☆☆

    A dividend is unlawful when it is paid at a time when there was an insufficient level of distributable profits available for the purpose

    Where this is the case the directors become personally liable to reimburse the company with the amount of the dividend

    Members are not liable to repay any dividend received that has been paid out of insufficient distributable profits unless they knew or ought reasonably to have known that the payment was an illegal distribution

    OK?

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