The Danish Companies Act allows payment of interim dividends to the shareholders of Danish public or private limited companies (A/S and ApS companies) from July 1 2004.
Before, it had only been possible to resolve to make dividend payments when adopting the annual report at the company's annual general meeting.
Interim dividends require an authorization adopted by a general meeting through a simple majority vote granted to the board of directors to decide on the payment of dividends (or the board of management in an ApS company without a board of directors). The authorization can be granted until the next annual general meeting and may include limitations as to the maximum amount or expiry date of the authorization, or it may be general, allowing the board of directors to pay dividends at its own discretion, but subject to the statutory limitations on payment of dividends.
The authorization must be included in the articles of association, stating the terms of the authorization and any limitations to it.
The board of directors' subsequent decision to pay interim dividends must be recorded in the board minutes and accompanied by:
- an interim balance sheet showing enough funds to pay the dividends. The interim balance sheet must have been reviewed and endorsed (but not audited) by the company's auditors;
- a declaration from the board of directors that the interim dividends to be paid do not exceed a reasonable amount in consideration of the company's financial position and, in parent companies, the group's financial position.
Dividends may be paid out of funds available for distribution as ordinary dividends or profit available for distribution in the present accounting year up to the date of the interim balance sheet.
The new feature is a welcomed improvement to Danish companies' ability to review and refine their balance sheets.