Companies Act 2014 section 124

Procedures for declarations, payments, etc., of dividends and other things

Section 124 sets out the default rules governing how dividends are declared, calculated and paid by a company, including the respective roles of directors and shareholders in that process.

• Dividends are declared by ordinary resolution of the shareholders, but may never exceed the amount recommended by the directors.
• Directors may pay interim dividends justified by profits, set aside profits as reserves, or carry forward undistributed profits — all at their discretion.
• Dividends must be calculated in proportion to the amounts paid up on each share, subject to any special dividend rights attaching to particular classes of shares.
• Directors may deduct from a member's dividend any sums that member immediately owes the company, such as unpaid calls on shares.