Australia's dividend rules to change again

On 14 December 2012, the Australian Government released an exposure draft Bill, the Corporations Legislation Amendment (Remuneration Disclosures and Other Measures) Bill 2012 (Bill), which proposes amendments to section 254T the Corporations Act 2001 (Cth) (Act). Section 254T deals with the requirements to enable a dividend to be declared or paid.

Originally, section 254T simply required a dividend to be paid out of profits. From 28 June 2010 the section was amended so that a dividend could only be paid if:

• The company's assets exceeded its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend
• The payment of the dividend is fair and reasonable to the company's shareholders as a whole