Generally speaking, assuming a straightforward process how long does it take to pay a dividend?
A reasonable time period for paying a dividend is one week.
No particular deadline is provided by Luxembourg law. The dividend in cash can be paid to the Shareholder in a short timeframe.
No particular deadline is provided by Luxembourg law. The dividend in cash can be paid to the Shareholder in a short timeframe.
Any timing restrictions on paying dividends?
No, there are no timing restrictions on paying annual dividends.
Please see below for interim dividends.
Please see below for interim dividends.
What accounts will be required to support payment of dividend and will these need to be audited?
The annual accounts are required to support payment of a dividend. The annual accounts have to be audited if the company has an auditor. Otherwise, no need for them to be audited.
Interim accounts dated less than 2 months prior to the distribution of the interim dividends will be required.
The interim accounts do not have to be audited. However, if the Company has appointed an auditor, the auditor shall check that the conditions for the distribution of an interim dividend have been fulfilled and shall issue a certificate.
Are there restrictions on the amount of dividends that can be paid?
No restrictions on the amount of dividends that can be paid provided that sufficient funds (profit + reserves) are available. For completeness, every year 5% of the net profit will be transferred to the legal reserve. This deduction ceases to be compulsory when the legal reserve amounts to one tenth of the issued share capital, as decreased or increased from time to time, but shall again become compulsory if the statutory reserve falls below such one tenth.
For an interim dividend distribution, the amount of the interim dividend cannot exceed the amount of the profits since the end of the last financial year plus (i) any profits carried forward and (ii) any amounts drawn from any reserves available for such purpose, less (iii) any losses carried forward and sums to be placed to reserve in accordance with the law or the articles of association.
The distribution cannot be made when, on the closing date of the last financial year, the net assets as set out in the annual accounts are, or following such a distribution would become, lower than the amount of the subscribed capital plus the reserves which may not be distributed under law or pursuant to the articles of association.
While dividends can be distributed from the distributable reserve, dividends cannot be distributed from the legal reserve.
For an interim dividend distribution, the amount of the interim dividend cannot exceed the amount of the profits since the end of the last financial year plus (i) any profits carried forward and (ii) any amounts drawn from any reserves available for such purpose, less (iii) any losses carried forward and sums to be placed to reserve in accordance with the law or the articles of association.
The distribution cannot be made when, on the closing date of the last financial year, the net assets as set out in the annual accounts are, or following such a distribution would become, lower than the amount of the subscribed capital plus the reserves which may not be distributed under law or pursuant to the articles of association.
While dividends can be distributed from the distributable reserve, dividends cannot be distributed from the legal reserve.
Are there any ways to increase reserves, and if so, how long do these generally take?
The distributable reserves can be increased by the allocation of profits to the carry forward profits at the time of the approval of the annual accounts.
Can cash be borrowed to settle a dividend?
Yes, provided that profits are sufficient to proceed with the distribution.