Screen a proposed dividend against the payment conditions
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- Set the proposed dividend beside the three conditions and leave each for the lawyer: assets exceed liabilities immediately before the dividend is declared and the excess is sufficient for the payment; the payment is fair and reasonable to the shareholders as a whole; and the payment does not materially prejudice the company's ability to pay its creditors. Record the note's example that payment would materially prejudice creditors if the company would become insolvent as a result. Record that assets and liabilities are calculated in accordance with accounting standards in force at the relevant time, even if a standard does not otherwise apply to the financial year. Do not calculate the excess and do not advise on the duty in the note that points to section 588G.
- What the lawyer must review
- The lawyer decides whether each condition is met on the figures and the accounting standards. The lawyer does not treat this screen as the insolvent-trading advice.
- Written for / version
- US
Open a jurisdiction version of this task to see which instruments apply: US
Who does what
| Role | What they do |
|---|---|
| Assistance | Set the proposed dividend beside the three conditions and leave each for the lawyer: assets exceed liabilities immediately before the dividend is declared and the excess is sufficient for the payment; the payment is fair and reasonable to the shareholders as a whole; and the payment does not materially prejudice the company's ability to pay its creditors. Record the note's example that payment would materially prejudice creditors if the company would become insolvent as a result. Record that assets and liabilities are calculated in accordance with accounting standards in force at the relevant time, even if a standard does not otherwise apply to the financial year. Do not calculate the excess and do not advise on the duty in the note that points to section 588G. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- All three conditions are on the screen, including fairness to shareholders as a whole.
- The comparison of assets and liabilities is immediately before the dividend is declared.
- The insolvency example is kept as the note's example of material prejudice.
- The note does not restate section 588G and does not state a dollar excess.
Sources
These are suggested working checks. Confirm the required checking with the responsible lawyer before work starts; the checking approach does not establish permission to use AI.