Dividend in specie meaning

Beard v HMRC [2025] EWCA Civ 385 Section 402(1) of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) levies income tax on dividends paid by companies that are not UK resident. Under s 402(4), dividends do not encompass ‘dividends of a capital nature’. Aside from that carve-out, the statute does not define ‘dividend’. The Explanatory Notes to the Bill that became ITTOIA 2005 indicate that identifying a dividend ‘will usually be a matter of referring to the relevant company law’. Case law has clarified the concept of a ‘dividend’ in other settings (for example, Memec v IRC [1996] STC 1336) and the capital versus income character of payments (for example, IRC v Reid’s Trustees [1949] AC 361, In re Duff’s Settlement [1951] Ch 923, Rae v Lazard [1963] 1 WLR 555, Courtaulds v Fleming [1969] 1 WLR 1683, Sinclair v Lee [1993] Ch 497 and First Nationwide v RCC [2012] EWCA Civ 278). The Court of Appeal had to decide whether distributions from a company incorporated...

What is a demerger? A demerger is a form of corporate organisation that separates businesses conducted by a company or group of companies, so that, following the demerger, the trading activities are run by independent management teams but remain, at least initially, under the control and ownership of all or any of the same shareholders as before. This approach is often undertaken in order to sharpen the management of discrete elements of the trading business, to ring-fence liabilities linked to particular trades, or to enhance shareholder value where the sum of the parts is considered greater than the wider conglomerate as a whole. There are several ways to carry out a demerger, including: an in specie distribution by way of a dividend of shares in the subsidiary being demerged to the parent company’s shareholders — typically the most straightforward route in practice a return of capital delivered as shares in the demerging subsidiary to the parent company’s shareholders a three‑cornered demerger, under which...

Dividends A company generally possesses an implied authority to share its profits with its members, save where the articles of association provide to the contrary. A dividend represents one form of distribution available to members and, in practice, is the distribution that companies make most frequently. To be lawful, any distribution must comply with Part 23 of the Companies Act 2006 (CA 2006) together with the common law rules on distributions, as adapted and informed by that Part. For a fuller consideration of the legal framework and routine practice relating to distributions made by a company, see Practice Note: Distributions. For information about the potential consequences and liabilities arising from failure to comply with the law on distributions, see Practice Note: Unlawful distributions. This Practice Note concentrates on the law and practice that ordinarily apply to the declaration and payment of dividends, which is a subject not specifically addressed in CA 2006, Pt 23. For details of the additional rules, procedures and guidance that apply in particular to dividends...

Company distributions and dividend payments are governed by, and fall under, Part 23 of the Companies Act 2006 (CA 2006). For an in-depth review of the law on distributions and dividends, refer to the Practice Notes: Distributions and Dividends—the legal framework. What is a distribution? For the purposes of CA 2006, Part 23 (sections 829–853), the term “distribution” is construed very broadly indeed. It covers any form of transfer of a company’s assets to its shareholders, in cash or otherwise, save for: the issue of bonus shares (fully or partly paid), and certain: reductions of share capital redemptions of shares buybacks of shares, and distributions of assets to members on the winding up of a company Where assets other than cash are distributed, this is commonly termed a distribution in kind, or in specie. What is a dividend? A dividend is one form of distribution...

Company number: [ enter company number ] [ enter company name ] [ LIMITED OR LTD ] Minutes of a meeting of the board of directors (the Meeting) of [ enter company name ] [ Limited OR Ltd ] (the Company) Held at [ enter place of meeting ] Held on [ enter day, month and year of meeting ] at [ enter time of meeting ] [ am OR pm ] Present: [ Enter the names of any directors in attendance, whether in person or by an approved remote means (unless such methods are expressly excluded by the company’s articles of association) ] [ by [ enter mode of participation for each director joining remotely ] ] In attendance: [ Enter the name of anyone present, physically or remotely, who does not form part of the quorum (e.g. the company secretary, any legal advisers) ] Apologies: [ Enter the names of any directors unable to attend the meeting ] ...

We proceed on the basis that the company is UK-resident and that the dividend is not being made between companies within the same group for tax purposes. When analysing the tax consequences for the distributing company, the initial enquiry is to determine whether the transaction sits within the statutory rules on loan relationships or, alternatively, within the corporation tax provisions dealing with chargeable gains. In the ordinary course, a loan note held by a company is regarded, for tax purposes, as a loan relationship, and is treated in line with that classification...