Legal help with an additional dividend

What is an additional dividend?

An additional dividend is a distribution approved at a shareholders’ meeting other than the annual general meeting. It may be considered when the company has distributable funds and the shareholders want to make a further distribution during the current financial year.

The shareholders’ meeting makes the final decision. Before the meeting, the board or another person submitting the proposal must prepare a formal dividend proposal. The board must also provide a reasoned statement addressing whether the proposed distribution is financially prudent.

The distribution must not reduce the company’s net assets below the amount required to cover its restricted equity. It must also be reasonable in light of the nature and risks of the business, the company’s liquidity, and its overall financial position.

What documents are required?

The documents depend on the company’s circumstances and how the shareholders’ meeting is conducted. The process will commonly require:

• a formal dividend proposal
• the board’s reasoned statement
• a report on significant events following the annual accounts
• an auditor’s statement when required
• a notice convening an extraordinary general meeting
• minutes from the relevant board meeting
• minutes from the extraordinary general meeting
• information for the registration with the Swedish Companies Registration Office

The proposal must state the dividend per share and the intended payment date. Additional financial records may be required because the annual accounts are not being considered at the meeting that decides the dividend.

The relevant documents must be made available to the shareholders before the meeting and presented at the meeting.

The resolution and registration

An additional dividend is usually approved at an extraordinary general meeting. The notice convening the meeting must describe the main content of the proposal, and the shareholders’ resolution must be recorded in the meeting minutes.

A dividend approved at a meeting other than the annual general meeting must be reported to the Swedish Companies Registration Office without delay. A dividend approved at the annual general meeting is subject to a different registration process and is not reported separately in the same way.

Before making the distribution, the company should confirm that:

• sufficient distributable funds are available
• previous distributions and other transfers of value have been considered
• the dividend is financially prudent
• the corporate documents satisfy the legal requirements
• the resolution is reported correctly

When to consult a lawyer

Professional legal assistance is particularly valuable when the company has made previous distributions during the financial year, its financial position has changed since the annual accounts, or there is uncertainty about the available amount or required documents.

Our lawyers review the circumstances, identify the documents that are needed, and help the company complete the decision-making and registration process correctly.