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Paying commission as a dividend

Shareholders of a company want to know how best to remunerate themselves for introductory fees

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Three shareholders operate a film production company and they want to pay each other on a commission basis for the clients/projects that each of the shareholders introduce to the company.

The shareholders have been advised to have alphabet shares so the board can decide to pay each of them different amounts of dividends each time.

As an example, a project with a £100k budget would generate £40,000 profit for the company. £4,000 of this would be paid (10%) to the shareholder who introduced the woork, £16,000 (40%) would stay in the company's bank account for cash flow and £20,000 (50%) would be divided between any of the three shareholders invovled in the production of the actual project.

Should the shareholders be paid the relevant introduction fee as a salary or leave it in the bank to be paid as a dividend later? They'd like to have a provision in their shareholders agreement that governs how these payments should be made.

Any guidance would be most helpful.

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By andy.partridge
20th Jun 2018 20:08

As a professional yourself you will surely understand that the directors should consult suitable advisors where their individual and unique circumstances can be ascertained before the best course of action is recommended.

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