ASIC clarifies impact of IFRSs on dividends
14 Oct 2005
The Australian Securities & Investments Commission (ASIC) has issued guidance on how the adoption of Australian International Financial Reporting Standards (A-IFRSs) affect an entity's ability to use past retained profits to pay dividends.
Under s254T of the Corporations Act 2001, a company can only pay dividends out of profits. The retained profits shown in the last financial report of a company are relevant for this purpose. Upon the adoption of A-IFRSs, the retained profits of some companies will change, sometimes materially. ASIC believes that retained profits previously reported on a pre-A-IFRS basis cease to have relevance for paying dividends after the first half-year financial report of a 'disclosing entity', or full year financial report of a 'non-disclosing entity' prepared under the Act using A-IFRSs, is completed. Only retained profits and current year profits recorded under A-IFRS will be relevant from that time going forward. Click for (PDF 23k).
