Do I need to pay shareholders dividends?

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We’re rapidly approaching our one-year anniversary of incorporation. We’ve got five shareholders involved in the company, and I’m just wondering whether I need to pay them annual dividends now that we have been trading for a year. We are all friends, and so no one seems particularly bothered about receiving any sort of dividends. But I am curious whether this is a legal requirement to issue them or not.

Answers

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There is no legal requirement to issue dividends at set intervals, so you can hold off on distributing profits to shareholders until a later date.

At some point in the future, however, it is likely that some, if not all, of the shareholders will expect to rewarded financially for their investment or involvement in the company.

Directors normally have the power to choose when to declare dividends to shareholders.

a year ago
 

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