Distributions
In this lesson, you'll learn how distributions and dividends work under the Companies Act 2006, and why understanding distributable profit is essential for advising clients on tax efficiency and cash extraction from their business.
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In this lesson
- 0:00 Distributable profit and dividend restrictions
- 0:42 How directors declare and approve dividends
- 1:52 Defining distributable profit and realised gains
- 2:39 Retained earnings and dividend eligibility
- 3:06 Public company dividend rules and unrealised losses
About this lesson
You'll discover what counts as distributable profit—accumulated realised profits minus realised losses, essentially your retained earnings—and why this matters when deciding how much you can actually pay out as a dividend. The video explains the practical tension many clients face: maximising tax deductions reduces profit, which limits the dividend available. You'll also walk through the mechanics of declaring and approving dividends, including the role of directors and shareholders, and how the rules differ between private and public companies. This content is directly relevant to Corporate and Business Law and taxation modules across ACCA and CIMA qualifications, where you'll need to advise on compliant dividend payments and the interplay between tax planning and cash management.
Duration: 4m
Transcript
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