How split dividend distributions work

How split dividend distributions work

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I have a one man band limited company who has added his wife as a 50% shareholder.  They normally withdraw dividends on a monthly basis each time the company receives money.  

Recently the director himself is not taking his dividends, he is holding his share back in the company bank account however, his wife is drawing her full 50% dividend available on a monthly basis each time the company receives funds.  

Now when the director decides he wants to pay out his held back dividends share, will the dividend then be split again when it is paid out or because he did not take his amount originally then this will only be his to take? 

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By User deleted
09th Nov 2012 15:26

What do you mean by ...

"not taking his dividends"?

There are two possibilities - either dividends are being declared in full, and the company is simply holding on to his cash entitlement, creating a credit to his loan account. In which case future drawdowns of that loan are simply that.

Alternatively, if he is providing the company with waivers each time a dividend is declared (why do I suspect that is not the case) so that dividends are indeed declared in the wife's name only then yes future dividends will need to be paid pro-rata - unless of course the wife takes the turn of waiving her entitlement.

I suspect that the former applies in your case, in which ase the sums are due to the husband in their entirety.

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