All you need to know about Dividends in Singapore

Congratulations! So, after starting your new business, you’ve finally made a profit.

A dividend is a payment made out to shareholders of your company after a profit has been made.

There are two types of dividends; final dividends and Interim dividends.

Final dividends are those approved by your company’s shareholders during an Annual General Meeting (AGM). Interim dividends payments are made based on your company’s profit. Unlike the final dividend, your company’s director can pay out interim dividends.

Once there’s a final declaration of dividends, the company becomes indebted to all shareholders it pays the dividends. Note that only non-payment of final dividends becomes debt and not interim dividends.

Directors who are unaware are also guilty of negligence and have breached fiduciary duty. They will also pay back the debt.

All profit after the settling of losses can be paid to shareholders. However, each shareholder gets a payment equivalent to their share.

As a director, you are a worker in your company and entitled to receive a salary. Being a salary earner and hence a taxpayer can influence your stay in Singapore as the ministry of Manpower considers them.

Also, if you decide to receive only dividends, whenever the company doesn’t make a profit, you get nothing.

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