Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/14161
Title: Corporate Accounting Principles and the Courts: Contested Premises in Dividend Policy
Contributor(s): Werren, Kip  (author)orcid 
Publication Date: 2010
Handle Link: https://hdl.handle.net/1959.11/14161
Abstract: The strict application of the doctrine of capital maintenance has been gradually modified by reforms to the Corporations Act 2001 (Cth). However, the requirement that dividends must be paid out of profits gives full effect to the capital maintenance doctrine. In paying dividends, the central issue is the meaning of profits, but the term profit is an elusive concept. It has different significance for the purposes of the accounting standards, taxation law and corporations law. This paper critically reviews the courts' significant, if somewhat disparate, guidance on dividend payments through the contemporary accounting methods adopted in the financial statements of companies. The courts have been disinclined to provide a definitive answer as to what profits are and judicial guidance in this regard deviates significantly from existing accounting policies and practice. The courts' general stance is that profits can be determined by a number of methods and that even in the context of dividends there may be multiple ways for determining the profits of a company. This paper reiterates that accounting standards are binding on disclosing entities, registered schemes, public companies and large proprietary companies. Considerable latitude is however given to small proprietary companies on how to present their financial information. This gap in the corporate governance regime underscores the need for court guidance on dividend payments. It is suggested in the paper that the present position should be reformed. In this regard the paper suggests possible alternatives and supplementary methods in light of practices in comparable jurisdictions.
Publication Type: Conference Publication
Conference Name: 65th Annual Australasian Law Teachers Association (ALTA) Conference - Power, Regulation and Responsibility: Lawyers in Times of Transition, Auckland, New Zealand, 4th - 7th July, 2010
Conference Details: 65th Annual Australasian Law Teachers Association (ALTA) Conference - Power, Regulation and Responsibility: Lawyers in Times of Transition, Auckland, New Zealand, 4th - 7th July, 2010
Source of Publication: ALTA Conference 2010 Programme and Abstract Book, p. 39-39
Publisher: Australasian Law Teachers Association
Place of Publication: Auckland, New Zealand
Field of Research (FOR): 180125 Taxation Law
180124 Property Law (excl Intellectual Property Law)
180109 Corporations and Associations Law
HERDC Category Description: E3 Extract of Scholarly Conference Publication
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