Jurisdiction(s):
United Kingdom

Key definition

Participating dividend definition

What does Participating dividend mean? A participating dividend is a distribution that allows the relevant shares to share in a company’s distributable profits, usually after any fixed preferential amount and commonly pro rata with ordinary shares. It is not tied to the shares’ nominal (par) value or to any share premium. The term is not defined in statute; it is a descriptive label used in company law practice across England & Wales, Scotland, Northern Ireland and Ireland, and its effect depends on the company’s articles of association or the terms of issue. It most often appears with participating preference shares, where holders...

Precedent articles provisions for preference shares: fixed and profit-linked participating dividends (non-leveraged investment)

Published by a LexisNexis Corporate expert

Precedents

Add the following new definitions in Article 2.1:

Accounts • means, for each Financial year of the Company, the audited [ consolidated ] balance sheet together with the profit and loss accounts of the Company and its subsidiary undertakings, prepared on the historical cost basis and in line with generally accepted accounting principles and all applicable accounting standards, Statements of Standard Accounting Practice, Financial Reporting Standards and Statements of Recommended Practice;
After Tax Profit • means the amount of the profit [ (including any unrealised profits) ] of the Group for the relevant financial year (as shown by the Accounts): (a) before any provision or reserve has been made for or in respect of: i the payment of any Dividend or other distribution on or in respect of any Shares or the transfer of any sum to reserves; ii the redemption of the [ Preferred Shares OR Loan Notes ]; and iii the amortisation or write-off of goodwill arising on consolidation; and (b) after provision has been made for corporation tax on the profits earned by the Group;
Participating dividend • means the dividend payable under Article 15.1.2;
Replace the current definition ‘Preferred Dividend’ in Article 2.1

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Web page updated on 22/05/2026

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