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CORPORATIONS ACT 2001

CHAPTER 2H - SHARES  

PART 2H.5 - DIVIDENDS  

SECTION 254T  CIRCUMSTANCES IN WHICH A DIVIDEND MAY BE PAID  

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254T(1)  [Requirements]  


A company must not pay a dividend unless:


(a) the company's assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend; and


(b) the payment of the dividend is fair and reasonable to the company's shareholders as a whole; and


(c) the payment of the dividend does not materially prejudice the company's ability to pay its creditors.

Note 1: As an example, the payment of a dividend would materially prejudice the company's ability to pay its creditors if the company would become insolvent as a result of the payment.

Note 2: For a director's duty to prevent insolvent trading on payment of dividends, see section 588G.

254T(2)  [Accounting standards]  


Assets and liabilities are to be calculated for the purposes of this section in accordance with accounting standards in force at the relevant time (even if the standard does not otherwise apply to the financial year of some or all of the companies concerned).


 



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