Shareholder Dividends

davidgee

Hi everybody. New to the forum and not too sure where to post this!
Basically i have been working for the same company now or 9 years. About 4 years ago i was given a 5% share in the business and for the past 3 years have been given a Dividend (5%) based on profits. This year however even though the company made a profit (£105k) i have not been given a Dividend and every time i mention the subject to my MD, it gets blown over or passed off. I dont think im going to get anything to be honest. Is there a Legal stance i have here? Am i legally entitled to my share?
Thanks for reading.
Dave

bap98189

A dividend is not a share of the profits. This is the way most business owners take money out of a company. The directors of a company decide when they wish to issue a dividend to the shareholders and this can be at any time, it is not an annual event. At that point, an agreed sum of money is taken out of the company accounts and divided up amongst the shareholders in accordance with their shareholding.

The fact the company has made a profit is not an automatic right for a dividend to be issued. They may decide to issue a dividend when a company makes a loss if it can be financed, or to keep the money in the company for whatever purposes they see fit.

I am assuming you are not a director of the ocmpany or else you would have received details of the meeting to issue the last dividend. In this case, there is little you can do other than ask the other shareholders or directors, but they have no obligation other than to tell you there are no plans to iussue one at this time.

davidgee

Hmm, I am a director of the company. Me, a Colleague (MD) and the Chairman. Not attended any Meeting as well.

DVardysShadow

Profit and dividend are not the same thing. Even though the business made £105000, the dividend could be zero. Or again, it could make no profit and still give a dividend from cash reserves. Obviously, the majority shareholders have set a zero dividend. You would only have a claim if you can prove 5% ownership and the other shareholders had taken a dividend.

davidgee

DVardysShadow wrote: »

You would only have a claim if you can prove 5% ownership and the other shareholders had taken a dividend.

Well i must have a case then. As i do own 5% and the MD HAS taken a dividend. Should i seek legal advice from a solicitor or is it a good idea to confront the chariman?

inmypocketnottheirs

Well as a shareholder you should be invited to the AGM which has to be held every year. Dividends will need to be minuted in the company register and the shareholders will need to vote. As a shareholder you can ask to see the minutes of the AGM.

DVardysShadow

davidgee wrote: »

Well i must have a case then. As i do own 5% and the MD HAS taken a dividend. Should i seek legal advice from a solicitor or is it a good idea to confront the chariman?

what inmypocket... says, tehn consult solicitor then confront chairman. But make sure you can prove your ownership.

And accept that you might make a big enemy. Possibly better to carry on working there, looking for another job, collecting your evidence of dividends being paid and keeping stum. Engineer a small breakdown in relationships so the chairman pays you off as employee and gives you a reference. Still stay stum until you are goen, then clainm your dividends.

inmypocketnottheirs

Yes, as above, the other director may be taking dividends in place of salary to reduce PAYE. Dividends are paid at 21% at the level in question, and maybe your colleague would be in 40% tax bracket. So there could be more to it than just a straight dividend payment.

davidgee

Mysolicitorisbetter wrote: »

What kind of company is this exactly? A Ltd/a partnership or what? Its quite possible the MD is receiving a partnership profit rather than salary or whatever.

It's a Limited I.T Company, Hardware reseller. I know the MD takes a salary and doesn't get paid in Dividends. As far as i'm aware there has been no AGM and there never normally is. It's all a bit tin pot to be honest. Hence my problem in the first place. I think i'm just going to sit it out for now and !!!!!! off in a few months and probably set up on my own. Thanks guys for the replies.

cazziebo

Since October 2008 there has been no obligation for small companies to hold an AGM.

Are you a Director named at Companies House? If so you have a legal duty to be informed and aware of the company's finances and financial transactions - you're liable if there is any wrongdoing! What kind of shares do you have? If they were gifted, then quite likely they are non voting.

The company doesn't have to pay out dividends, it can reinvest or retain cash. Do you have access to the company accounts?

DVardysShadow

Mysolicitorisbetter wrote: »

If its a Ltd company it must have an AGM to which all shareholders are invited.

Dividends must be paid to all staff.

staff -> shareholders