Hi,
I am a shareholder in a company that has built up a £132,000 of retained profit over the last few years but this year looks as if it'll make a loss of around £90,000 due to investment in the workforce. My question is, can the previously built up profit still be taken as dividends or will the £90k loss cancel out most of it to just leave £42k available?
Thanks for your help.
Replies (3)
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Agree with the above
And you probably wouldn't have the £132 k in the bank to take out as dividends in the first place.
Well ...
... since company law allows you to base your dividends on the last statutory accounts and requires you to prepare interim accounts only if those statutory accounts show insufficient reserves, there is an argument that you could take the full £132k. However, if you are aware that this is likely to leave you with a deficit, you'd need to consider your general fiduciary duties. Safer to keep it at £42k.