Mark McLaughlin warns in the context of family or owner-managed companies that ‘backdating’ dividends can have serious repercussions.
It is common in family or owner-managed companies for dividends to be paid to their shareholders. In most cases, the company’s constitutional documents provide for its shareholders to declare dividends in general meetings, although sometimes the directors are given the power to declare dividends to the exclusion of general meetings.
Don’t pretend!
Dividends must comply with certain legal requirements to be lawful. A serious mistake for company owners is ‘backdating’ dividends (e.g., pretending a dividend was declared earlier than it was really declared by dating the dividend paperwork prior to the date of the decision to declare it). Such dishonesty could land those responsible in serious trouble with
