A reasonable time period for paying a dividend is 1-2 days.
There is no fixed timeline from when the corporate approvals are dated/obtained and the date in which the dividends are remitted. The corporate approvals can be dated at any date prior to the actual distribution of the dividends and for that matter, the corporate approvals may be dated 1-2 day(s) apart.
Generally, however, in practice, the Company will proceed to firstly obtain the corporate approvals and once that has been obtained, they would proceed with the actual payment of the dividends after the book closure date.
The time period between the book closure date and the actual payment will depend on the practice of each Company.
No, there are no timing restrictions on paying dividends unless otherwise stipulated in the Company's Constitution.
Not applicable as dividends can be declared provided the company has sufficient distributable profits and will be solvent immediately after the distribution is made. Typically, reference will be made to the latest management accounts of the Company prior to the declaration of dividends.
Yes, there are restrictions on the amount of dividends that can be paid provided that:
- the Company's Constitution does not contain for any restrictions in respect of dividends payable;
- there are sufficient distributable profits (as it is a requirement under Malaysia's Companies Act 2016 that dividends cannot be declared except out of profits); and
- the company satisfies the solvency test (i.e., the company will be solvent immediately after the distribution is made);
Not applicable. Under the Companies Act 2016, companies are no longer required to maintain a share premium and capital redemption reserves. Therefore, there are no applicable reserves.
No regulatory approvals are required in connection with payment of a dividend.
No, there are no foreign exchange requirements on paying dividends to foreign parent companies.
Yes, there are no restrictions from a corporate law perspective on borrowing cash to settle a dividend.
Note that borrowing cash to settle a dividend can possibly result in the incurrence of an interest expense that will not be tax deductible because the expense is not incurred wholly and exclusively for the production of income. If the borrowing is from an external bank or affiliate outside of Malaysia, there will be Malaysian withholding tax consequences for the interest payment.
Yes, dividends in kind are possible, depending on Constitution of the Company paying the dividend.
Note that there are stamp duty implications to issuing a dividend in kind, a dividend in kind can potentially be subject to ad valorem duty on the value of the in kind contribution.