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Definition
A dividend is a distribution of a company’s post-tax profit to shareholders, lawful only to the extent of distributable reserves. Directors declare it; it is not a business expense.
In plain terms
It is the owners’ share of the profit, taken after corporation tax. Unlike salary, it must come from real accumulated profit — you cannot pay a dividend out of a loss.
Why it matters for your company
Paying dividends beyond available reserves is unlawful and recoverable from directors. Balance rewarding owners against retaining cash for growth and debt service. See dividend cover and interim dividend.
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