... company legislation iv. distributing capital to members in the case of winding up v. reducing capital under established procedures In order for any limited company; whether they are public or private to distribute dividends out to its members it must have a distributable profit, in order for profit to be distributable the 'realised profit test' must be satisfied,. This is stated in S.2632. Further requirements are needed relation to public limited companies, this will be discussed later. In short as asked in 'issue A' by law according to S.263 the 'realised profit test' must be satisfied before dividends can be paid out to the company's members. Realised Profit Test Profit available for distribution= Accumulated realised profits - Accumulated realised losses 'Profit available for distribution' is calculated by deducting 'accumulated realised losses' from 'accumulated realised profits'. 'Realised profits/losses' are the sales of assets less cost of sales, so if above zero then it is a 'realised ...

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