Companies: Investment Income
The question
To ask the Secretary of State for Business and Trade, what steps his Department is taking to ensure that companies comply with section 830 of the Companies Act 2006 on dividend payments; and whether he plans to (a) strengthen enforcement and (b) introduce disclosure requirements.
Answered by Justin Madders
Under section 830, companies may only pay a dividend if they have sufficient accumulated realised profits to make the payment. The Government intends to give the audit regulator responsibility for issuing guidance on how companies calculate their realised profits for such purposes as part of wider plans to introduce an Audit Reform and Corporate Governance Bill when Parliamentary time allows. Additionally, the Government intends in the coming months to consult on options to modernise the corporate reporting framework, which will provide an opportunity for stakeholders to give feedback on how to simplify and reduce reporting as well on possible additional disclosure requirements around realised profits.
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