New Dividend Requirements
Section 254T of the Corporations Act 2001 has been amended to state a company must not pay a dividend unless all of these conditions are met:
- The company’s assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend
- The payment of the dividend is fair and reasonable to the company’s shareholders as a whole
- The payment of the dividend does not materially prejudice the company’s ability to pay its creditors.
Refer to Page 4, Deloitte July 2010 Accounting Alert