Dividend query

Dividend query

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Our holding company declared a dividend to shareholders from its distributable reserves, there's no issue here, the holding company has sufficient distributable reserves from a dividend paid from a subsidiary earlier in the year.

One sub owes the holding co some money from a transaction earlier in the year, are there any legal implications if the divi is declared by the holding co but paid by the sub and contra'd against inter-company balances?

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By pawncob
23rd Dec 2011 12:50

Legal Minefield

It's not a legal dividend as far as the sub is concerned, and it doesn't qualify as a dividend as far as Holding is concerned so it doesn't satisfy the dividend.

Don't use shortcuts! Pay Holding and let h pay the div.

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