Who decides on dividend distribution within the company?
Who Makes the Decision?
- Under the Companies Act
- The timing and amount of dividend distributions are determined by the Board of Directors
Directors Must Assess the Company's Financial Position
- The company should have sufficient cash flow for the next 12 months
- And be able to meet its debt obligations
- The company's bank account must have sufficient funds
- To support both dividend payments and daily operations
Ensuring Business Continuity
- After distributing dividends
- The company must still be able to operate normally and meet its financial commitments
Basic Requirements for Dividend Distribution
- The company must have profits available for distribution
- And must comply with its tax obligations before declaring dividends
Summary
- Dividends are not decided by shareholders, but by the Board of Directors
- Before declaring dividends, directors must ensure the company has sufficient funds and remains solvent after the distribution