A reasonable time period for paying a dividend is immediate after adoption of a resolution regarding the distribution of profits.
Ordinary shareholders' meeting, which is authorized to grant dividends to shareholders, is held annually within six months of the end of the financial year. The preparation and, if required by law, audit of the financial statements must be conducted before shareholder's meeting. A shareholders' meeting have to be convened two weeks before it is held.
No, there are no timing restrictions on paying dividends.
It is possible to decide first on retaining profits in the company or resign from adopting resolution in this matter, and later to change this decision. Undistributed profits from previous years may be distributed with dividends in the following years.
Exception. Unpaid preference dividend (e.g. if it is a fixed or minimum dividend) falling due in previous years may be paid only if it is permitted by the articles of association. The articles of association have to specify the number of years for which outstanding preference dividends may be paid out, but no more than five years.
The accounts required to support payment of a dividend include annual: profit and loss account, balance sheet and notes to the accounts.
If the accounts have to be audited, they should also include a cash flow statement and a statement of changes in equity.
The accounts have to be audited in case of:
- the annual consolidated accounts of capital groups;
- the accounts of the acquiring companies and newly established companies, prepared for the financial year in which the merger took place;
- the annual accounts of the entities prepared in accordance with IAS, IFRS;
- the annual accounts of entities which, in the preceding financial year, met at least two of the following conditions: (i) the average annual full-time equivalent employment was at least 50 persons; (ii) the balance sheet total at the end of the financial year was equivalent to at least EUR 2,500,000; (iii) net revenues from sales of goods and products and financial operations for the financial year were equivalent to at least EUR 5,000,000.
Yes, there are restrictions on the amount of dividends that can be paid.
The maximum permissible level of dividends is calculated using the following algorithm:
profits for the last financial year
+undivided profits from previous years
- uncovered losses
- value of own shares
+ sums drawn from the supplementary and reserve capitals created out of profits which may be divided
- sums which according to the law or the articles of association should be allocated, from the profits for the previous financial year, to the supplementary or reserve capitals
= the maximum permissible level of dividends
Yes, it is possible to increase reserves.
If the articles of association include an obligation for shareholders to pay additional contributions (Polish: dopłaty), that may be done quickly. Unless the articles of association or a resolution of shareholders provide otherwise, additional contributions shall become due on the date of adoption of the resolution of shareholders' meeting to impose them.
The articles of association may provide for an obligation for shareholders to grant loans to the company, which will also allow for quick gathering of funds for the company, but it should be taken into consideration that these funds will not constitute equity but liabilities from the accounting point of view.
If the articles of association do not provide for any additional contributions or loan agreement, the increase in reserves will require registration of the increase in the share capital or amendment of the articles of association, which will take approximately 3 - 8 weeks.
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.
As the payment of dividends is subject to withholding tax, an appropriate analysis of the conditions for the use of a potential withholding tax exemption or reduced tax rate should be carried out in advance. The potential obligation to collect withholding tax by the entity paying the dividend must always be taken into account.