Hassle-free help from the UK's best Corporate solicitors.
Transparent pricing, from start to finishGet the support you need, when you need itTrusted lawyers, clear expectations
Transparent pricing, from start to finishGet the support you need, when you need itTrusted lawyers, clear expectations
Amazing experience
After placing an enquiry, I received a call 20 minutes later, and then 2 hours later, I had a solicitor assigned to me. They were absolutely incredible right from the word go - amazing and very prompt with replies, answering all my questions and keeping the process moving. We finally completed today and I am so unbelievably happy. I wouldn’t hesitate to use Lawhive again in the future if needed.
Lily
First class service
I initially made an online enquiry about a tricky conveyancing matter and received an immediate call back. They understood straight away what was needed and gave me a quote that was very reasonable. It was such a pleasure to find someone who was cheerful, professional and completely reassuring as I’d been getting quite anxious about the sale of my house. The service Lawhive has provided is absolutely first class and I cannot recommend them enough.
Charles
Empathetic, professional and efficient
I am an executor, selling my mother's home. I found the assistance I received from Lawhive first rate - empathetic, professional and efficient.
Mark
Great service from Lawhive
We used Lawhive for our conveyancing needs and our solicitor was very helpful, patient and informative. She helped us with our needs with prompt responses and provided a very efficient service.
Kelvin
Great service when you need clarity and calm
Our solicitor was warm, friendly and provided crystal clear communication. A lot of conveyancers assume customers know everything about the process already, so it was really appreciated to hear each stage included in the price given.
Em
Quick and efficient
We used Lawhive for a transfer of property and conveyancing. Our solicitor was so helpful and thorough with the whole process. He responded quickly and efficiently to any questions or requests that we had and explained some of the more complicated issues regarding the process clearly.
Geri
Fantastic service and experience with Lawhive
I had the pleasure of working with Lawhive doing a transfer of equity on a property. Our solicitor’s service was amazing, she responded quickly to any questions or concerns and kept me updated throughout the process. I can strongly recommend her for any conveyancing work that you may need. Fantastic service all round.
Jane
Amazing experience
After placing an enquiry, I received a call 20 minutes later, and then 2 hours later, I had a solicitor assigned to me. They were absolutely incredible right from the word go - amazing and very prompt with replies, answering all my questions and keeping the process moving. We finally completed today and I am so unbelievably happy. I wouldn’t hesitate to use Lawhive again in the future if needed.
Lily
First class service
I initially made an online enquiry about a tricky conveyancing matter and received an immediate call back. They understood straight away what was needed and gave me a quote that was very reasonable. It was such a pleasure to find someone who was cheerful, professional and completely reassuring as I’d been getting quite anxious about the sale of my house. The service Lawhive has provided is absolutely first class and I cannot recommend them enough.
Charles
Empathetic, professional and efficient
I am an executor, selling my mother's home. I found the assistance I received from Lawhive first rate - empathetic, professional and efficient.
Mark
Great service from Lawhive
We used Lawhive for our conveyancing needs and our solicitor was very helpful, patient and informative. She helped us with our needs with prompt responses and provided a very efficient service.
Kelvin
Great service when you need clarity and calm
Our solicitor was warm, friendly and provided crystal clear communication. A lot of conveyancers assume customers know everything about the process already, so it was really appreciated to hear each stage included in the price given.
Em
Quick and efficient
We used Lawhive for a transfer of property and conveyancing. Our solicitor was so helpful and thorough with the whole process. He responded quickly and efficiently to any questions or requests that we had and explained some of the more complicated issues regarding the process clearly.
Geri
Fantastic service and experience with Lawhive
I had the pleasure of working with Lawhive doing a transfer of equity on a property. Our solicitor’s service was amazing, she responded quickly to any questions or concerns and kept me updated throughout the process. I can strongly recommend her for any conveyancing work that you may need. Fantastic service all round.
Jane
It shouldn’t take a law degree to find the right legal service for you. With Lawhive, you can get legal help in just a couple of steps.
Answer a few questions on our site and instantly speak to a member of our team for a quote or request a callback at a time you choose.
We’re always open about our fees, so you’ll never pay more than you’re expecting.
Our lawyers are carefully selected for their expertise and experience, so you’re always in safe hands.
01 overview
Dividends are a way to reward shareholders, reflecting their investment in a company's success.
Dividends represent a portion of a company’s profits distributed to its shareholders. They are a key indicator of financial health and a significant incentive for investment. Properly managing dividend distribution is essential not only to reward shareholders but also to maintain regulatory compliance and sustain corporate growth.
At Lawhive, our network of corporate lawyers are on hand to provide expert legal services for dividend distribution. They will guide you through the process of declaring and paying dividends, ensuring you meet all legal requirements while optimising your dividend strategy.
Whether you are a company director, shareholder, or business owner, we are committed to helping you with the legal and financial aspects of paying dividends including:
Contact us today for a free case evaluation and get a no-obligation quote for assistance with all aspects of paying dividends. Our personable and knowledgeable Legal Assessment Team is ready to support you in making informed decisions that benefit both your company and shareholders.
Dividends are a portion of a company's profits that are distributed to its shareholders as a reward for their investment in the company.
They serve as a tangible return on the shareholders' investment and reflect the company's financial health and profitability.
Dividends can be issued by both private and public companies.
Companies pay dividends to:
Companies have several options when it comes to paying dividends to their shareholders.
Each type has its own characteristics and implications.
| Type of Dividend | Description | Frequency | Impact |
| Cash Dividends | Cash dividends are the most common form of dividend payments. Shareholders receive a cash payment, typically on a per-share basis. | Can be paid regularly (e.g., quarterly, semi-annually, or annually) or as special dividends. | Cash dividends provide immediate income to shareholders but reduce the company's cash reserves. |
| Stock Dividends | Instead of cash, shareholders receive additional shares of the company's stock. This increases the number of shares each shareholder owns. | Usually issued as a percentage of existing shares (e.g., a 5% stock dividend means shareholders receive an additional 5 shares for every 100 shares owned). | Stock dividends dilute the share price but do not affect the company's cash position. They can signal confidence in the company's future. |
| Interim Dividends | Dividends are paid before a company's annual general meeting (AGM) and the finalisation of its annual accounts. | Typically declared and paid out quarterly or semi-annually. | Interim dividends provide shareholders with a portion of profits throughout the year. |
| Final Dividends | Declared at the end of the financial year after the company’s accounts have been finalised and approved at the AGM. | Annually. | Final dividends often represent the bulk of the company’s annual dividend payments and provide a clear indication of the company’s yearly performance. |
| Special Dividends | One-time payments are made in addition to regular dividends, often from extraordinary profits or a specific financial event (e.g., asset sale). | Irregular, based on special circumstances. | Special dividends are a way to distribute surplus cash without committing to ongoing higher payments. |
| Property Dividends | Dividends are paid in the form of physical assets rather than cash or stock, such as property, products, or other tangible items. | Rare and typically used in specific circumstances where liquidating assets is beneficial. | These can be complex to administer and may have tax implications for the company and shareholders. |
| Scrip Dividends | Shareholders are given the option to receive dividends in the form of additional shares instead of cash. This can be attractive during periods when cash conservation is critical. | Usually offered during periods of cash flow constraints or when the company wants to retain cash for growth. | Scrip dividends help preserve cash while rewarding shareholders with increased equity. |
| Liquidating Dividends | Payments are made to shareholders when a company is partially or fully liquidated. These dividends are paid from the company’s capital base. | One-time payments during liquidation events. | Liquidating dividends returns invested capital to shareholders and signals the winding down of company operations. |
In England and Wales, dividends can only be paid out of profits available for distribution. This is a legal requirement under the Companies Act 2006.
To work out if your company has enough profits to pay dividends you have to calculate distributable reserves.
To do this:
You must also review the cash flow statement to ensure the company has sufficient cash to pay the dividend as, even if the company has enough distributable profits, it must also have enough cash to make the payment.
Key legal requirements for declaring a dividend include:
Under the Companies Act 2006, a company can only pay dividends out of profits available for distribution.
This means the company must have enough distributable profits, which are typically accumulated realised profits minus accumulated realised losses.
You must make sure that these profits are confirmed before any dividend is declared to avoid legal repercussions.
First, you must make sure that the company has enough profits to pay the dividends and that they are distributable, meaning they are not already allocated to other expenses.
You also need to determine the exact amount each shareholder will receive by determining the total amount of dividends to be distributed.
To do this, calculate each shareholder’s share based on the number of shares they own.
To propose and approve the dividend payment schedule a meeting with the company’s directors. Within the meeting, discuss and propose the amount of dividends to be paid.
To get approval, the directors will vote to approve the dividend payment. This is then documented in the meeting minutes.
To inform shareholders about the dividend decision, send a notification to all shareholders about the approved dividend.
You should include details like the amount of the dividend, payment date, and any other relevant information.
To distribute the dividends and keep accurate records, transfer the dividend amounts to the shareholders. This can be done via bank transfer or cheque.
You must document the transaction in the company’s financial records, noting the amount paid to each shareholder and the payment date.
You can earn up to £500 in dividends without paying tax, regardless of your tax bracket.
If your dividend income exceeds the tax-free allowance and isn't part of a tax-sheltered investment (like an ISA or SIPP), you'll need to pay tax on the excess.
Dividends earned from investments in ISAs (Individual Savings Accounts) or SIPPs (Self-Invested Personal Pensions) are not subject to income tax.
If you live outside the UK, the tax you pay on UK dividends might be influenced by double taxation treaties between the UK and your home country.
One of the main challenges companies face when paying dividends is ensuring they have enough distributable profits.
According to the Companies Act 2006, dividends can only be paid out of profits available for distribution. Therefore, if the company doesn't have enough profits, it is legally prohibited from declaring dividends.
This situation can be particularly challenging during periods of low profitability or financial downturns.
Paying dividends can, of course, have a significant impact on a company's cash flow and financial stability. While dividends provide a return to shareholders, they also reduce the cash available for other business needs, such as investment in growth opportunities or debt repayment.
Companies must carefully balance the desire to reward shareholders with maintaining sufficient cash reserves to ensure ongoing operations and financial health.
Sometimes shareholders may disagree on how much profit should be distributed as dividends vs how much should be invested in the business, and the timing of dividend payments.
The key to resolving disputes is to facilitate communication among shareholders and have a well-defined dividend policy included in the company's articles of association which outlines how and when dividends will be paid and the criteria for distribution.
Getting legal help with dividend payments offers several advantages:
You don't have to get legal help regarding paying dividends, but it does streamline the process and support you through any tricky points.
Here at Lawhive, we offer comprehensive support for your company in managing and understanding your dividend payments. It is not always easy to ensure legal compliance and keep up to date with any changes, but we are here to help.
Our network of corporate lawyers is on hand to provide:
By partnering with Lawhive, companies can benefit from our expertise and ensure that their dividend payments are handled efficiently and legally, protecting the company and its shareholders.
Contact us for a free case evaluation and quote for the services of a specialist lawyer.
With straightforward pricing - so you know exactly what to expect at every step.
