Payment of Dividends Corporations Amendment Corporate Reporting Reform Bill 2010

On 9 June 2010, the Australian Institute of Company Directors wrote to the Hon Chris Bowen MP regarding the test for the payment of dividends included in the Corporations Amendment (Corporate Reporting Reform) Bill 2010. Pursuant to the Bill companies will need to ensure that amongst other things, their "assets are greater than liabilities" before paying a dividend. This test will need to be calculated in accordance with Accounting Standards. As a consequence, small companies that are not required to prepare their financial statements in compliance with International Financial Reporting Standards (IFRS) will need to consider and apply IFRS before paying a dividend. The Australian Institute of Company Directors expressed its concern to the Minister that this test will increase the red tape burden for small business.