Dividends/directors loan questions

jimbo747

In may this year I took £22500 in dividends, previous years profits showed around £30000 that could be withdraw. Other director and 50% shareholder took £5000 at that point. I resigned as director in July partly to focus on another co. I am joint director of, but also wasn't happy with how other director was running the company, I know the other director took another £20k in dividends in July shortly before I resigned.

Will these dividends affect me, ie make part of mine viewed as an illegal dividend/convert to a directors loan, or will fact I took them first make a difference? Accountant on holiday otherwise I'd bother him. From September I don't believe the company is actively trading any more, all staff were tuped over elsewhere, but are still paying for various things without money coming in, basically I'd expect profit to be minimal for 18/19 and unlikely to cover the additional dividends taken.

jimbo747

!!!!, put this in wrong forum.

CKhalvashi

Dividends are linked to shareholdings, not directorships.

You need to speak to an accountant, as you may be owed money by the company and if you have any personal guarantees on company debt then this may affect the legal position.

Shareholders own the company and the profits (My post assumes you're still a shareholder)

Directors run the company on behalf of the shareholders and have a legal duty to run the company in the interests of the company.

Super_Whiskey

All dividends have to be equal to shareholders with the same class of shares. If the other director took his in cash then the company will owe you some money.


Dividends have to be approved in a board meeting officially so you would have to be present when they are awarded (unless your company's articles say otherwise).


If they were made in good faith at the time based on the knowledge available then you'll have to state in your accounts something along those lines and HMRC may not punish you for it.


If you took dividends knowing there were no distributable reserves available then you will have to pay them back to the company as those would definitely be illegal.