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Final v Interim Dividend

Final v Interim Dividend

Could someone please explain the difference and what difference it makes to the Company accounts. Thanks
AJJ

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12th Oct 2006 14:57

No difference?
I do not believe that there is any difference between interim and final dividends either in terms of disclosure in the accounts or in method of payment.

Under the new rules, dividends do not appear in the statutory P & L account and only appear in the reserves note to the accounts for the year in which they are declared/paid. Proposed dividends are not disclosed, unless you wish to volunteer the information in a note.

I accept that dividends can be declared by a resolution of the directors, but in most small companies they are also the members, so it is just as easy to have a resolution of the members.

You might say that an interim dividend is one declared before accounts have been prepared to confirm the existence of sufficient profits after tax to cover the dividend, but this would not be relevant if the dividend was less than the retained profits in the previous accounts.

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By Anonymous
12th Oct 2006 13:21

interim - directors, final members
An interim dividend is declared and paid by the directors subject to the members approval (at the AGM after the accounts have been laid before the members or members written resolution).

A final dividend is a dividend approved by the members either in general meeting or by writen resolution. I think these used to be shown as proposed dividends before the latest FRS on events after the balance sheet date or final dividend paid if approved by the members in the year.

I believe an interim dividend should be paid in cash but that a final dividend as it is approved by the members could be credited to a directors loan account at the date of approval rather than paid in cash.

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12th Oct 2006 14:02

... thanks, but...
Why can an interim not be paid to the dirs loan account within the year - if it was approved by the members?

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12th Oct 2006 15:32

interim once approved by members would then be final
An interim dividend is usually a dividend declared by the directors without reference to shareholders - it is just paid.

If members approve the dividend then the dividend is final.

An interim dividend may be approved at the annual general meeting later but by that time the dividend should have been paid.

If you want to have the dividend credited to the loan account I would suggest assuming a director/shareholder company a directors writen resolution declaring a final dividend (considering sufficient profits available to make the dividend) following by a members written resolution approving the dividend at the same time.

There was an article in Taxation some years ago (11.11.99) which covered interim dividends in the context of overdrawn loan accounts

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