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Clarification of Dividend Rules in Companies Bill gets third reading

14 November 2019

The Companies (Clarification of Dividend Rules in Companies) Amendment Bill had its third reading on 13 November 2019.

The private member's bill was introduced by National Party MP Todd Muller on 5 April 2018.

The bill amends the Companies Act 1993 to give clarification of dividend rules outlined in sections 36 and 53, where there is currently doubt about the ability of a company constitution to provide for “dry shares”. “Dry shares” are shares that are not linked to supply and therefore may have no, or limited, rights to dividends.

New clause 4 replaces section 53(2) and would retain the three existing exclusions for when a board may authorise a differential dividend, as currently set out in section 53(2) and make it clear that a company’s constitution may provide for differential dividends and that the board may authorise a dividend in accordance with the constitution.

The bill comes into force on the day after it receives the Royal assent.

Last updated on the 14th November 2019