Skip to main content Accessibility help
×
Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-24T18:14:46.134Z Has data issue: false hasContentIssue false

19 - Realised and distributable profits

from Part II - Some specifics

Published online by Cambridge University Press:  02 November 2009

Get access

Summary

Introduction

The issues of which profits are realised and which are distributable are important. These issues arise for an individual company, not for a group: legally it is companies that make distributions, not groups. Thus, for example, in a simple group comprising a parent and its subsidiary, the subsidiary may make a distribution to its parent out of profits available for that purpose. The parent may then, if it has profits available for distribution (and this does not automatically follow simply because a subsidiary has dividended up some of its profits), make a distribution to its shareholders. Therefore, to speak of the group having distributable profits or having made a distribution is not valid. Problems can sometimes arise in a group, for all sorts of reasons, in getting distributions up from a profitable subsidiary to the top parent company so that it has sufficient distributable profits to make a distribution to its shareholders.

Accordingly, the matters discussed in this chapter relate to individual companies and the discussion concerns what amounts are realised and distributable for UK companies only. For companies registered in other countries, the rules may be different from those in the UK, although the basic rules for companies registered in other EU Member States are likely to be broadly similar (although the resulting number may be different due to different GAAPs applying), as the national laws of all Member States are based on the Second EU Company Law Directive of 1976, and it is the law that is the starting point for calculating realised and distributable profits.

‘Realised’ and ‘distributable’

The two terms ‘realised’ and ‘distributable’ are related but separate and it is important to distinguish them.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×