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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
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Dear Sirs, Please could you elucidate on how a waivered

Resolved Question:

Dear Sirs,

Please could you elucidate on how a waivered dividend is accounted for within a firm's books.

If shareholder A waives their dividends, do they still have a charge on the firm as a future payable?

Or does the waiver and document thereto itself legally and financially remove any entitlement the Shareholder A had on those dividends available at that stage, but not paid to Shareholder A given their waivering of their share?

Many thanks.

IB
Submitted: 2 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 2 years ago.
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

It is important to note that when a shareholder waives off his dividend, in most cases, if it is not waived off in favor of the other, the amoun would remain within the company. Please note that this will certainly remove any entitlement of the Shareholder A had on those dividends which were available at that point of time.

You will have not tax problems with HMRC as well because, as I presume, after waiver by A, the funds remain within the company in its cash reserves which will get reduced by lesser amount because of the waiver and the dividend is not waived off in favor of other shareholder, which is always viewed by HMRC as methods of tax evasion.

The following are good general references:

http://www.accountingweb.co.uk/topic/tax/dividend-waivers-get-details-right/481882


http://www.companybug.com/what-is-a-dividend-waiver/


I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,
Customer: replied 2 years ago.
Hi there, Thanks so much for your speedy answer. I appreciate the funds remain within the firm within Dist Reserves, but I am still not wiser regarding the entitlement. Can Shareholder A now claim that amount due to them? Surely this would be a liability show somewhere in the firm's books? Thanks again!
Expert:  Rakhi Vasavada replied 2 years ago.
Dear Friend,

Hello and welcome again. Thanks for your follow up reply.

No, there is no way a shareholder can claim entitlement of waived dividend. The waiver, such obtained, is express in nature with signature of the shareholder.

This does not show as liability anywhere. It remains in the reserves as mentioned as the reserves are reduced by lesser amounts. Waivers are obtained before the payouts.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4536
Experience: Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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