Hello,
If a shareholder has signed a dividend waiver form before the start of a financial year (the waiver applies to all dividends relating to that year), but then later in the year they decide that they do want to receive a dividend after all, is it possible to reverse/cancel/rescind the original waiver? If so, what would the procedure to do so be?
Many thanks!
Replies (5)
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No
For a waiver to be effective - for tax purposes at least - it needs to be irrevocable. Which is why a shareholder needs to consider very carefully the implications of making a blanket waiver.
Agreed
There is no consideration for a waiver so it must be executed as a deed which is legally binding in and of itself. Declare a dividend out of the previous year's reserves? If the waiver was dividends arising in the year it won't work but the question says 'relating to that year'. Watch also any dividends which are avoided more than one year after the execution of the waiver as they may not fall within the IHT exemption in IHTA84 s15 - if the right to the dividend accrues after this date it is a chargeable lifetime transfer that should be reported on IHT100! Dividend waivers should be executed for each dividend as it is contemplated.
@Paul
this is probably silly but if there was say £1 consideration would that be legal and would if affect matters
No
The whole legal purpose of a waiver is NOT to receive consideration - if there was consideration you would have sold your dividend and would still be taxed on it, in full.
Check out my 'Dividend Waiver' article
I wrote an article on Dividend Waivers way back in Feb 2011 which covers your queries.
As BKD states - its irrevocable.
Quote from text: 'Nothing should be given in consideration of the waiver'
Dividend Waivers - Get it Right. Find it under the tag below.
https://www.accountingweb.co.uk/category/tags/company-secretarial