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How do I issue dividends in Singapore?



How do I issue dividends in Singapore?


Issuing dividends in Singapore involves a process typically overseen by the company's directors and approved by shareholders. Here's a breakdown of the general steps:


1. Board Recommendation:


  • The company's directors assess the company's financial health and recommend a dividend amount per share.


2. Dividend Type:


There are two main dividend types:


  • Final Dividend: Requires shareholder approval at the Annual General Meeting (AGM) and can only be declared from available profits.

  • Interim Dividend:  Declared by the board at any time, based on strong financial performance, but can be revoked before payment.


3. Shareholder Approval (Final Dividends Only):


  • For final dividends, shareholders vote on the proposed amount at the AGM.


4. Company Resolution:


  • Once approved (final dividend) or decided (interim dividend), the board formalizes the decision with a company resolution.


5. Necessary Paperwork:


  • This may include dividend vouchers and documentation complying with Singapore's Companies Act.


Additional Points:


  • Dividends in Singapore are generally paid in cash, but other forms like stock or property are also possible.

  • It's crucial to ensure sufficient profits exist before declaring dividends, as directors face legal consequences for improper payouts.


For a more in-depth guide, consider consulting a corporate lawyer or financial advisor in Singapore. They can advise on the specifics of your situation and ensure compliance with regulations.


Can private company declare dividend?


Private companies in Singapore can declare dividends to their shareholders. There are however some regulations to follow:


  • Profits Requirement: The most important rule is that dividends can only be declared and paid out of a company's profits. A company cannot distribute dividends if it has made a loss, and directors can face legal repercussions for improper payouts.

  • Board Approval: The decision to declare dividends rests with the company's board of directors. They assess the company's financial health and propose a dividend amount per share.

  • Shareholder Approval (Final Dividends):  For final dividends, which are typically larger and declared at the end of the fiscal year, approval by shareholders at the Annual General Meeting (AGM) is required.

  • Company Constitution:  The company's constitution may also have provisions regarding dividend declarations, such as limitations on the amount that can be paid out.


What is the dividend rule in Singapore?


There are two main dividend rules in Singapore:


  1. Profit Requirement: This is the most important rule. Dividends can only be declared and paid out of a company's profits. Distributing dividends when the company is in a loss position is illegal and directors can face legal repercussions.

  2. Shareholder Approval (Final Dividends): For final dividends, typically larger and declared at the end of the fiscal year, approval by shareholders at the Annual General Meeting (AGM) is required. There's no such requirement for interim dividends, but they can be revoked by the board before payment.


Can dividend be declared in kind?


Dividends in Singapore can be declared in kind. This means that dividends can be paid in assets other than cash, such as property, stocks, or other investments held by the company.


Here are some additional points to consider:


  • Company Constitution: While legal, the company's constitution may restrict or prohibit dividends in kind. It's important to check the constitution for any such provisions.

  • Tax Implications: Dividends in kind can have different tax implications compared to cash dividends. It's recommended to consult with a tax advisor to understand the specific tax treatment for your situation.

  • Valuation: The fair value of the assets used for the in-kind dividend needs to be determined for accounting purposes.

  • Shareholder Approval: Even for interim dividends, if the dividend in kind is significant, shareholder approval might be advisable.


Overall, while dividends in kind are an option in Singapore, there are additional complexities to consider compared to cash dividends. Consulting with a corporate lawyer or financial advisor can help ensure a smooth process and compliance with regulations.


How Bestar can Help


Here's how Bestar can help with issuing dividends in Singapore:


While the decision to issue dividends lies with the company's directors, Bestar, as an accounting firm, can assist with the following aspects of the process:


  • Financial Analysis: We can analyze the company's financial statements to determine if sufficient profits are available for dividend payouts. This helps ensure compliance with the requirement that dividends can only be declared from profits.

  • Recordkeeping and Documentation: We can assist with maintaining accurate records of dividend payments and preparing the necessary paperwork, such as dividend vouchers, in accordance with Singapore's Companies Act.

  • Tax Implications: We can advise on the potential tax implications of different dividend types (cash, stock, etc.) for both the company and shareholders.

  • Communication with Shareholders: We help prepare communications to shareholders regarding the dividend proposal and tax implications.


Given the complexities of dividend issuance, it's advisable to consult with Bestar to understand the specific services we offer and how we can tailor our assistance to your company's needs.


We can provide guidance on the legal aspects of dividend issuance, ensuring compliance with company regulations and relevant laws.




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