Dividends may be payed also during the year!

The law permitting the payment of dividends during the year was voted. According to the principle “autumn is a time of harvest “, perhaps from September or October this year we will already be able to reap the “fruits” of the business.

On July 12, the normative act (Law 163/2018) amending the dividend payment procedure was published, which allowes the distribution of the profit between the companies’ shareholders also quarterly, within the limit of the net profit realized after the preliminary filing of an interim financial statement .

The law permitting the payment of dividends during the year was voted. According to the principle “autumn is a time of harvest “, perhaps from September or October this year we will already be able to reap the “fruits” of the business.

On July 12, the normative act (Law 163/2018) amending the dividend payment procedure was published, which allowes the distribution of the profit between the companies’ shareholders also quarterly, within the limit of the net profit realized after the preliminary filing of an interim financial statement .

Until now, the legislation allowed profit distribution only after approval of the annual financial statements, which prevents entrepreneurs from using their profit during the year for other investments, and sometimes forced the entrepreneurs to do some accounting tricks regarding the high cash unsettled advance payments. Last but not least, the raising of dividends in the next fiscal year was delaying the collection of dividends tax to the State Budget, so we have a win-win situation through the new legislative provision. But now, pay great attention to unjustified cash advances!

Concerning the bureaucratic side, the interim balance-sheets that must be presented with the decision to allocate dividends during the year should be audited if companies have statutory audits of their annual financial statements or if they opt for auditing them. Interim financial statements should also be checked by censors if annual balance sheets must be verified by censors.

The same normative act stipulates that: if, following the annual adjustment, on the basis of the year-end financial statement, it emerged that dividends were higher than the net profit realized, the associates must repay the amounts within 60 days, otherwise, the shareholders owe interest to the company until full recovery.

Caution: the coverage of the loss from the previous years must be taken into consideration also when calculating the quarterly dividends.