How do I document the declaration and payment of a dividend?

The declaration and payment of a dividend involve two steps that are important to distinguish in the company's documentation.

The declaration of a dividend is generally authorized by the board of directors. This decision must be properly documented in a written resolution or in the minutes of the meeting at which the dividend was declared.

Depending on the circumstances, the decision may specify, in particular:

• 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 or payment terms.

This documentation should be kept in the company's minutes book.

The dividend payment , for its part, corresponds to the payment made to the shareholders who are entitled to it. It can be evidenced in particular by accounting records, bank statements, checks, electronic transfers or other relevant supporting documents.

The required tax documents must also be prepared when required by applicable tax rules.

It is therefore important not to confuse the resolution declaring the dividend with proof of its payment. The former documents the corporate decision; the accounting and financial documents demonstrate that the payment was actually made.

In summary , the declaration of a dividend must be properly documented in the company's corporate records, while its payment must be traceable in the accounting and financial records. Together, these documents allow for the establishment of the dividend declaration and its payment.