Payment and Cancellation of Dividends: When Two Worlds Collide

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dc.contributor.author Keating, Mark en
dc.date.accessioned 2012-04-11T00:09:44Z en
dc.date.issued 2010-06 en
dc.identifier.citation New Zealand Universities Law Review 24(1):75-97 Jun 2010 en
dc.identifier.issn 0549-0618 en
dc.identifier.uri http://hdl.handle.net/2292/16955 en
dc.description.abstract When payment of a dividend is complete has many consequences for the company and its shareholders. It would therefore be expected that the legal treatment of that dividend was consistent between company law and tax. However, competing High Court decisions differ over the status of dividends declared by a company that subsequently becomes unable to pay the dividend without breaching the solvency test prescribed by the Companies Act 1993. A series of company law cases have extended the solvency test so it applies both when a dividend is declared and when it b subsequently paid out to the shareholders, often years later. By contrast, a recent tax case determined a dividend is complete and irreversible immediately it is declared, regardless of whether those funds have been paid out to shareholders. This article considers the different statutory regimes for company and tax law and compares the consequences for both the company and its shareholders to determine whether the divergent treatment can be reconciled. The author concludes the reasoning in the company law cases is flawed and prefers the analysis adopted in the tax decision. en
dc.publisher Brookers Ltd. en
dc.relation.ispartofseries New Zealand Universities Law Review en
dc.rights Items in ResearchSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Previously published items are made available in accordance with the copyright policy of the publisher. Details obtained from http://www.sherpa.ac.uk/romeo/issn/0549-0618/ en
dc.rights.uri https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm en
dc.title Payment and Cancellation of Dividends: When Two Worlds Collide en
dc.type Journal Article en
pubs.issue 1 en
pubs.begin-page 75 en
pubs.volume 24 en
dc.rights.holder Copyright: Brookers Ltd. en
pubs.author-url http://www.nzulr.com/archives/vol24no1.htm en
pubs.end-page 97 en
dc.rights.accessrights http://purl.org/eprint/accessRights/RestrictedAccess en
pubs.subtype Article en
pubs.elements-id 168915 en
pubs.record-created-at-source-date 2010-11-02 en


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