The new business legislation, which comes into power on 1 January 2023, brings lots of alterations. In our existing blog series, we existing these in detail.
The previous firm legislation did not contain any provisions on interim dividends, i.e. dividends paid out of the business outcomes of the recent economical 12 months. The permissibility of these kinds of interim dividends has so been controversial.
Having said that, an interim dividend may perhaps provide legitimate pursuits, e.g. to redistribute liquidity within a group of corporations. In addition, many foreign shareholders are accustomed to quarterly dividends because of to the legal condition in their home nations.
The new business regulation consequently supplies that interim dividends may perhaps be dispersed (Artwork. 675a revCO). A foundation in the content of affiliation is not essential for this.
Procedure must be diligently adopted mainly because as interim dividends entail the hazard of withdrawing resources from the enterprise even however the operating small business is previously doing inadequately, interim economic statements ought to be well prepared in progress.
The interim financial statements must be organized in accordance with the provisions governing the annual financial statements and shall have a equilibrium sheet, an money assertion and an annex. Even so, the law permits specific simplifications or lowered prerequisites, offered that this does not impair the presentation of the system of small business (Artwork. 960f para. 1 and 2 revCO).
When figuring out the interim dividend, allocations to the statutory and voluntary reserves should be designed in advance (Art. 675 para. 3 in conjunction with Art. 671 ff. revCO).
The interim money statements will have to be audited by the auditors prior to the resolution of the shareholders’ meeting, normally the resolution of the shareholders’ meeting is null and void (Art. 675a para. 2 f. in conjunction with Artwork. 731 revCO). There is, on the other hand, no responsibility to audit if the firm is issue to neither the normal nor the confined audit obligation (Art. 675a para. 2 revCO). What’s more, the duty of because of diligence should prohibit the board of directors from proposing an interim dividend to the shareholders’ meeting if this would jeopardize the company’s expected liquidity.
There is continue to the choice that if all shareholders approve the interim dividend and the claims of collectors are not jeopardized by this kind of interim dividend, the audit by the auditors may well be waived. Not minimum for the reason that this removes a precautionary measure, on the other hand, the regulation helps make specific reference in connection with interim dividends to the obligation to repay in the occasion of unjustified dividends (Art. 675a para. 3 in conjunction with Art. 678 para. Art. 678 para. 1 revCO this refund obligation is also getting revised, which we will describe in additional depth in a separate blog site write-up).
The resolve of the interim dividend and the approval of the interim economical statements necessary for this reason are among the non-transferable powers of the shareholders’ meeting and can for that reason not be delegated to the board of directors (Artwork. 698 para. 2 no. 5 revCO). Firms that do not wish to keep a shareholders’ meeting in common form to resolve an interim dividend may possibly desire to make use of the new alternatives of virtual or hybrid shareholders’ meetings (see our website: “Basic assembly less than the new firm legislation – what is shifting?” of March 7, 2022).
A distinction need to be built among an interim dividend and a staggered dividend that is declared at the yearly basic meeting on the foundation of the permitted annual financial statements (of a finished money year). This remains permissible, as does an incredible dividend, which is declared by the shareholders and paid out from the usable fairness as said in the yearly fiscal assertion already authorized by the pertinent the once-a-year common assembly.
