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Re: BM Electrical Solutions Limited [2020]

Misfeasance proceedings. The respondent director had been advised by an accountant to take a very low salary, and to draw other monies as dividends as a means of saving tax. The director failed to formally declare such dividends. The Court held that the payments were loans made to the director, which were liable to be repaid. The case demonstrates and affirms the importance of formal declaration of dividends; the fact that a director-shareholder honestly intended to receive the payments as dividends will not be sufficient.