Legal Updates

Transfer of a company asset to a shareholder is deemed dividend distribution that require fulfilment of the terms for such

September 10, 2017
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A holding company sought to transfer the ownership in a subsidiary to its mother company.

The Court held that a transfer of holdings to a shareholder is in fact a distribution of dividends in kind and thus the company need show profits distributable under law, unless the company can show existence of liquid assets that will enable it to pay all existing and expected debts. The Court approved the transaction because the company is a holdings company with no debts and not activity that may create future debts.