Unlawful dividends — guidance for insolvency practitioners
This briefing note is intended to provide guidance to insolvency practitioners who wish to consider whether to seek repayment on behalf of the company of dividends paid to shareholders.
It addresses the legal requirements to be met before a dividend can be paid, under the Companies Act 2006, and the company’s articles of association, as well as at common law. It explains what can be done where dividends are found to have been paid unlawfully and considers the limited circumstances in which the court will grant relief to shareholders who have received dividends in contravention of the law.
The distribution of cash or assets of a company prior to its demise is not a rare occurrence. Where an insolvency practitioner, in the course of their investigations, uncovers such a distribution, they will wish to be satisfied that it is lawful. The courts are known to adopt a strict line when considering compliance with the legal requirements for distributions. This note considers some of the key features of the statutory rules, common law and case law relating to the most common form of distribution, namely a dividend to shareholders…
If you are registered and logged in to the site, click on the link below to read the rest of the Winckworth Sherwood briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Winckworth Sherwood
News from The Lawyer
Briefings from Winckworth Sherwood
Negotiating the settlement of a dispute is rarely straightforward.
This briefing, which has been written by Winckworth Sherwood’s family law experts, provides an overview of the procedure involved.