From: ITM 
Newsgroups: uk.finance
Subject: Dividend payments / multiple shareholders query
Date: Sun, 09 May 2004 20:11:50 GMT

I'm returning to contract work after a break, and would like to bill
my services via a software company which I co-founded last year. This
company was mainly funded by a venture capital trust, but ran out of
money a few months ago. It did not earn any revenue.

The current situation is that there are 5 other shareholders of this
company (including the venture capital trust). I own about 34% of the
company. Since I do not regard myself as "caught" by IR35 for my new
contract, I would prefer to pay myself a nominal salary, and receive
the remainder of my earnings in the form of dividends.

The current accountant is not happy about this, as he does not regard
it as legal for me to draw a dividend from the company without
proportionate dividends being paid to all other shareholders. Could
anyone advise on the legality of this? If it IS legal, then would I
need any special resolutions from the board in order to proceed??

TIA for any advice.