At what point does a dividend become payable?

A dividend does not become payable simply because the company makes a profit. It must first be validly declared by the board of directors, in accordance with the conditions stipulated by applicable law.

When declaring a dividend, the board of directors may, in particular, determine:

• the amount of the dividend or how it is calculated;
• the class or series of shares entitling the holder to the dividend;
• the date of declaration;
• the reference date for determining which shareholders are entitled to it, when such a date is set;
• the date on which the dividend will be paid;
• other payment methods.

It is therefore important to distinguish between the declaration date and the payment date. The declaration corresponds to the board of directors' decision to declare the dividend. Payment may take place at the same time or on a later date specified in the decision.

Before a dividend is declared, a shareholder generally cannot demand payment simply because the company has the necessary financial resources or has made a profit.

Once the dividend has been validly declared, the rights arising from it must be determined according to the terms of the declaration and the applicable rules.

The decision declaring the dividend should be properly documented and kept in the company's minutes book.

In summary , a dividend must first be validly declared by the board of directors. The date on which it becomes payable then depends on the terms stipulated in its declaration, particularly the payment date set by the board.