Distributable profits
The accumulated realised profits and losses, evidenced by relevant accounts, that bound a company distribution.
The accumulated realised profits and losses, evidenced by relevant accounts, that bound a company distribution.
Distributions require profits available
Reviewed · Current · Law · From 6 April 2008
A company may distribute only accumulated, realised profits not previously used, less accumulated, realised losses not previously written off through a duly made capital reduction or reorganisation.
A positive bank balance, current-period profit, or informal retained-earnings figure is insufficient: cash does not establish profits available for distribution.
Exceptions and branches
- Public companies, investment companies, insurance companies, distributions in kind, and other statutory restrictions have additional branches.
Relevant accounts justify the distribution
Reviewed · Current · Law · From 6 April 2008
The Part 23 test uses profits, losses, assets, liabilities, provisions, share capital, and reserves stated in relevant accounts.
Last annual accounts are usual. Interim or initial accounts can justify a distribution in the statutory cases only if the applicable accounting requirements are met.
Exceptions and branches
- Sections 837 to 839 set the requirements for each account type.
Related concepts
Linked from
Sources
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Companies Act 2006, Part 23 — Sections 830(1) and (2), and 836. Primary authority.
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Companies Act 2006, Part 23 — Section 836. Primary authority.
Knowledge version: sterling-knowledge@2026-09-11.7. Last checked 11 September 2026.