A company shall not declare or pay dividend if there are reasonable grounds for believing that the company is or would be, after the payment, unable to pay its liabilities as they become due.
Companies and Allied Matters Act 2020 · Part B · Chapter 16
Section 428 Restriction on declaration and payment of dividends
Cite as: Companies and Allied Matters Act 2020, section 428
What this section means
From the guide: Dividends under CAMA 2020: declaring, distributable profits and unclaimed dividends
- A company can pay dividends only out of profits available for the purpose (sections 426 and 427), on the directors’ recommendation, and not if it would be unable to pay its liabilities as they fall due (section 428).
- A company must not declare or pay a dividend if there are reasonable grounds for believing it is or would, after the payment, be unable to pay its liabilities as they become due (section 428).
Read the whole subject
Source: Companies and Allied Matters Act 2020 (Act No. 3 of 2020), Official Gazette No. 124, Lagos, 10 August 2020. General information, not legal advice.