Can a shareholder waive a dividend?

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Why would a shareholder waive a dividend?

In family company scenarios, dividends are usually waived where the shareholder doesn’t want the money – perhaps because they are concerned about paying a lot of tax on the dividend, or perhaps they think the company needs the funds more than they do.

When can a dividend be waived?

The waiver needs to have been signed before the right to a dividend arises, to avoid a situation whereby it is deemed to be a false arrangement or a settlement on another shareholder for tax purposes. There should also be a commercial reason for waiving a dividend.

Can you choose not to take a dividend?

The decision to waive the dividend is up to the individual shareholder but the decision still shouldn’t be taken lightly. Talk to your accountant or financial advisor if you feel that it’s something you want to explore in the future and they may be able to offer further advice and alternatives.

Do shareholders have to accept dividends?

In most companies, the company directors must hold a board meeting to officially ‘declare’ interim dividends. To issue a final dividend, meanwhile, shareholders must grant their approval by passing an ordinary resolution at a general meeting, or in writing.

What is a deed of waiver?

by Practical Law Corporate. A standard document for the release of existing indebtedness or obligations by way of consideration for an asset or share sale.

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Can a shareholder waive a dividend Canada?

A shareholder may decide to waive his rights to a single dividend distribution, or to all dividends declared within a financial year, or indefinitely. Your accountant should be able to provide you with the specific wording for your needs.

What happens if you don’t take dividends?

Companies that once paid and have stopped paying dividends may have insufficient cash flow to support a dividend payment, and that may be cause for concern. Slow market or business conditions can also contribute to a company’s decision to retain earnings.