Accountants need to be aware of the perils of giving advice regarding the declaration of dividends – particularly where the company may end up entering formal Insolvency.
If the correct legal procedure is not followed, and the declaration of a dividend is found to be unlawful, it is not only the recipient of the payment (i.e. the shareholder) who can be in the firing line of a Liquidator subsequently appointed to review the history of the company.
Directors can also be sued for facilitating the declaration of the dividend, even if they were not the recipients of the money.
Accountants who advised at the time can also be dragged into proceedings.
This could involve a claim from a Liquidator brought against the Accountant on behalf of the company for damages for incorrect advice/negligence and/or a claim from the director/shareholder brought for recompense after he/she has been sued by the Liquidator.
An error in this complex arena can be extremely costly.
If you are in any doubt, just contact Clarke Bell (on 0161 907 4044) (or e-mail: [email protected]) and we can advise you or your client. As experienced Insolvency Practitioners, we have seen how these situations can go horribly wrong once a Liquidator has been appointed.
We have arrangements in place with specialist lawyers to ensure that the best possible expert advice can be accessed in an affordable way.