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CHAPTER 14
DIVIDENDS

If insufficient provision is made for bad debts so that the dividend is, in effect, paid out of capital, the directors will be liable in the company's liquidation unless they made the payments honestly and without negligence.(4)
2. Unless restrained by its articles, a company can pay dividends out of a realised profit on its capital assets.
The company is forbidden to distribute any part of its capital among its shareholders, but if the capital is intact there is nothing in the Companies Act to prevent it from distributing any increase as dividend.
Lubbock v. British Bank of South America, [1892] 2 Ch. 198. A company with a paid-up capital of £500,000 sold part of its undertaking for £875,000. After deducting the capital and certain expenses from this sum, a balance of £205,000 was left which the company proposed to divide as dividend. Held, the company could do so.

Before any increase of capital can be distributed as dividend, the whole of the capital must be considered. The increase in value of one item alone, without reference to the rest of the capital, will not justify the payment of a dividend. (5)
Even if the increase in value of capital assets is unrealised there seems no reason why it should not, if the company sees fit to do so, be distributed as dividend. (6)
It has been held that a company which has redeemed its debentures at a discount cannot distribute the amount realised by the redemption as profit when there has been an equivalent fall in value of the other capital of the company. (7)
3. A company can pay dividends out of the profits of any one year, without first making good the losses of previous years.
Ammonia Soda Co. v. Chamberlain, [1918] 1 Ch. 266. In 1911 a company had £12,970 to the debit of its profit and loss account. The company's land and buildings then stood in the balance sheet at the value of £63,246. The directors then entered the value of the land and buildings at £83,788, being what they honestly thought they were worth. They also carried £20,542 (the amount of the increased value) to a reserve account to which they charged the debit balance of the profit and loss account. Trading profits were then made and dividends declared. Held, (1) the dividends were paid out of profits and not out of capital; (2) the previous losses were losses of capital as there were no profits which could have been lost, and there was no obligation to replace a capital loss before declaring dividends; (3) there was no objection to the revaluation, and the treatment of the appreciation in value thereby ascertained.

4 In re National Bank of Wales, [1899] 2 Ch. 629; [1901] A. C. 477.
5 Foster v. New Trinidad Asphalt Co., [1901] 1 Ch. 208.
6 See Stiebel's Company Law (3rd ed.), pp. 72, 364.
7 Wall v. London and Provincial Trust, [1920] 1 Ch. 45.

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where is HTML where is HEAD where is TITLE If insufficient provision is made for bad debts so that what is dividend is, in effect, paid out of capital, what is directors will be liable in what is company's liquidation unless they made what is payments honestly and without negligence.(4) 2. Unless restrained by its articles, a company can pay dividends out of a realised profit on its capital assets. what is company is forbidden to distribute any part of its capital among its shareholders, but if what is capital is intact there is nothing in what is Companies Act to prevent it from distributing any increase as dividend. Lubbock v. British Bank of South America, [1892] 2 Ch. 198. A company with a paid-up capital of £500,000 sold part of its undertaking for £875,000. After deducting what is capital and certain expenses from this sum, a balance of £205,000 was left which what is company proposed to divide as dividend. Held, what is company could do so. Before any increase of capital can be distributed as dividend, what is whole of what is capital must be considered. what is increase in value of one item alone, without reference to what is rest of what is capital, will not justify what is payment of a dividend. (5) Even if what is increase in value of capital assets is unrealised there seems no reason why it should not, if what is company sees fit to do so, be distributed as dividend. (6) It has been held that a company which has redeemed its debentures at a discount cannot distribute what is amount realised by what is redemption as profit when there has been an equivalent fall in value of what is other capital of what is company. (7) 3. A company can pay dividends out of what is profits of any one year, without first making good what is losses of previous years. Ammonia Soda Co. v. Chamberlain, [1918] 1 Ch. 266. In 1911 a company had £12,970 to what is debit of its profit and loss account. what is company's land and buildings then stood in what is balance sheet at what is value of £63,246. what is directors then entered what is value of what is land and buildings at £83,788, being what they honestly thought they were worth. They also carried £20,542 (the amount of what is increased value) to a reserve account to which they charged what is debit balance of what is profit and loss account. Trading profits were then made and dividends declared. Held, (1) what is dividends were paid out of profits and not out of capital; (2) what is previous losses were losses of capital as there were no profits which could have been lost, and there was no obligation to replace a capital loss before declaring dividends; (3) there was no objection to what is revaluation, and what is treatment of what is appreciation in value thereby ascertained. 4 In re National Bank of Wales, [1899] 2 Ch. 629; [1901] A. C. 477. 5 Foster v. New Trinidad Asphalt Co., [1901] 1 Ch. 208. 6 See Stiebel's Company Law (3rd ed.), pp. 72, 364. 7 Wall v. London and Provincial Trust, [1920] 1 Ch. 45. where is meta name="keywords" content="old books, Free book , free book offer , free audio books , free coloring book pages , free book reports , free audio book , audio books free download , book free , free guest book , books free , free book summaries , download free audio books , free childrens books." where is where are they now rel="stylesheet" type="text/css" href="../../style.css" where is meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1" where is BODY bgColor=#ffffff text="#000000" where are they now ="#000000" v where are they now ="#FF0000" where is div align="center" where is strong where is strong where is a href="http://www.aaoldbooks.com" Books > where is a href="../default.asp" title="Book" Old Books > where is strong where is a href="default.asp" Poetry Northwest (1959) where is table width="700" border="1" align="center" cellpadding="15" cellspacing="0" where is center where is tr where is td width="160" align="center" valign="top" where is div align="center" where is td align="center" valign="top" where is div align="left" where is div align="center" where is p align="left" Page 156 where is strong CHAPTER 14 DIVIDENDS where is p align="justify" If insufficient provision is made for bad debts so that what is dividend is, in effect, paid out of capital, what is directors will be liable in what is company's liquidation unless they made the payments honestly and without negligence.(4) 2. Unless restrained by its articles, a company can pay dividends out of a realised profit on its capital assets. what is company is forbidden to distribute any part of its capital among its shareholders, but if what is capital is intact there is nothing in what is Companies Act to prevent it from distributing any increase as dividend. Lubbock v. British Bank of South America, [1892] 2 Ch. 198. A company with a paid-up capital of £500,000 sold part of its undertaking for £875,000. After deducting what is capital and certain expenses from this sum, a balance of £205,000 was left which what is company proposed to divide as dividend. Held, what is company could do so. Before any increase of capital can be distributed as dividend, what is whole of what is capital must be considered. what is increase in value of one item alone, without reference to what is rest of what is capital, will not justify what is payment of a dividend. (5) Even if what is increase in value of capital assets is unrealised there seems no reason why it should not, if what is company sees fit to do so, be distributed as dividend. (6) It has been held that a company which has redeemed its debentures at a discount cannot distribute what is amount realised by what is redemption as profit when there has been an equivalent fall in value of the other capital of what is company. (7) 3. A company can pay dividends out of what is profits of any one year, without first making good what is losses of previous years. Ammonia Soda Co. v. Chamberlain, [1918] 1 Ch. 266. In 1911 a company had £12,970 to what is debit of its profit and loss account. what is company's land and buildings then stood in what is balance sheet at what is value of £63,246. what is directors then entered what is value of what is land and buildings at £83,788, being what they honestly thought they were worth. They also carried £20,542 (the amount of what is increased value) to a reserve account to which they charged what is debit balance of what is profit and loss account. Trading profits were then made and dividends declared. Held, (1) what is dividends were paid out of profits and not out of capital; (2) what is previous losses were losses of capital as there were no profits which could have been lost, and there was no obligation to replace a capital loss before declaring dividends; (3) there was no objection to what is revaluation, and what is treatment of what is appreciation in value thereby ascertained. 4 In re National Bank of Wales, [1899] 2 Ch. 629; [1901] A. C. 477. 5 Foster v. New Trinidad Asphalt Co., [1901] 1 Ch. 208. 6 See Stiebel's Company Law (3rd ed.), pp. 72, 364. 7 Wall v. London and Provincial Trust, [1920] 1 Ch. 45. where is Server.Execute("_SiteMap.asp") %

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