DIVIDENDS

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					           DIVIDENDS
• Payment made out of company
  profits;
• Dividends cannot be paid out of
  capital;
• Directors can be personally liable if
  allow dividends to be paid out when
  there are reasonable grounds for
  suspecting company insolvent.
 Declaration of final dividends (if
company has its own Constitution)

Normal procedure
  – Directors recommend the payment of
    the final dividend
  – Once members confirm the dividend at
    AGM, the dividend is declared
  – Shareholders can reject the dividend
    or reduce it, but not increase it.
   Declaration and payment (if
company has its own Constitution)
A company does not incur a debt merely by fixing the amount
or time for payment. The debt arises only when the time for
payment arrives and the decision to pay the dividend my be
revoked at any time before then.
                         HOWEVER
If the company has a Constitution and it provides for the
declaration of dividends, the company incurs a debt when
the dividend is declared
  Payment of dividend if company
     adopts Replaceable Rules
• Directors may determine that a dividend is
  payable and fix the amount and time for payment;
• A date is set for payment of the dividend and from
  that date the company has a legal liability to pay it
  – legal liability arises at the date set for payment.
• Declaration under this situation does not create a
  liability for the company, and the decision may be
  revoked or amended before paid.
      Types of dividends


• Final dividend
• Interim dividend
     Disclosure statements

• A company offering securities
  for issue must make disclosure to
  investors unless exemptions
  applicable.
• Exemptions – p101
       Disclosure Documents
•   Prospectus
•   Profile statements
•   Offer information statements
•   Disclosure documents must be
    lodged with ASIC prior to
    distribution
    Disclosure requirements

• Prospectus must provide all the
  information that investors and
  their professional advisors would
  reasonably require………
• Offer information statement-
  lower level of disclosure
     Corporate borrowing

• Debentures –a document that
  acknowledges the company’s
  indebtedness
• Secured or unsecured
      Secured Debentures
       -MORTGAGES-

A debenture which has land as
security

Land CANNOT be sold without the
lender’s consent
      Secured Debentures
      -FIXED CHARGE-
Fixed charge – a debenture which
has a specific item of property as
security.
Borrower cannot dispose of
property WITHOUT LENDERS
CONSENT
     Secured Debentures
   -FLOATING CHARGES
Floating charge – security which
‘floats above’ a particular category
of assets, e.g trading stock

Borrower CAN dispose of property
without the lenders consent
    REGISTRATION OF
       CHARGES
Priority of registrable charges
Rule 1
Registered charges take priority over
unregistered charges unless the registered
charge holder had notice at the time of
creation of the charge that there was an
earlier charge
      REGISTRATION OF
         CHARGES
Rule 2

Earlier registered charges take priority
over later registered charges unless the
charge holder had notice at the time of
creation of the charge that there was an
earlier charge.
     REGISTRATION OF
        CHARGES
Rule 3

Fixed charges take priority over
floating charges unless the floating
charge was registered with a
negative pledge
     REGISTRATION OF
        CHARGES
Rule 4

The charge holders may vary the
order of priority by agreement
between themselves

				
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