Marshall: calculating distributable reserves

The complex rules around distributable reserves has led to incorrect dividend payments and miscalculations, with interim reporting creating further challenges for listed companies. Andrew Marshall FCA, senior technical partner at KPMG, examines the issues

The subject of distributable reserves has been much in the news recently and has become a subject of some controversy. There are a number of reasons behind this, including an increased incidence in the number of illegal dividends being paid by listed companies; together with instances where companies have paid substantial dividends in years shortly before they ran into funding issues. 

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