Replies to Post #115409 onFlexpower Inc. (FLXP)

Replies to #115409 on Flexpower Inc. (FLXP)

11/19/08 5:59 PM

Yes capt. But the bylaws were not changed and provisions for divdends amended untill July 31, 2007...long after the 2005 date. One should read section 5 in particular. But I am no securities lawyer. Here is the link.
http://pinksheets.com/otciq/ajax/showFinancialReportById.pdf?id=11389

Also see:
Shareholder dividends
Introduction
A dividend is where a company’s money or property (other its own shares) are transferred, directly or indirectly, to a shareholder of the company or for the shareholder’s benefit. (This does not include, however, where a company buys its own shares from a shareholder, nor where the company gives financial assistance to a shareholder for the purpose of buying the company’s shares).

The payment of dividends is governed by the COMPANIES ACT 1993 and by the company’s constitution, if it has one. See How to draft a company constitution and How to: The rights, powers and liabilities of shareholders ).

The directors’ power to pay dividends
Unless the constitution says otherwise, the company’s board of directors may authorise the payment of a dividend without needing a decision of the shareholders. However, the company must satisfy the "solvency test" (see below).

The directors may not authorise dividends to be paid to some but not all of the shareholders in a particular class, nor may they pay some shareholders in a class a greater value of dividend than is paid to other shareholders in the same class (unless payment is made in proportion to the amounts paid on shares).

Solvency test must be satisfied
Before the board of a company may authorise the distribution of company funds as dividends, the directors must be satisfied that, immediately after the dividend is paid, the company will satisfy the solvency test. This test has two limbs:

First, the company must be able to pay its debts as they become due in the normal course of business.
Second, the value of the company’s assets must be greater than the value of its liabilities.
If after a dividend has been paid the company fails to satisfy the solvency test, the company may recover the dividend from each shareholder, unless:

the shareholder received the dividend in good faith without knowing that the test wasn’t satisfied, and
the shareholder altered his or her position in reliance on the dividend, and
it would be unfair to require the shareholder to repay the dividend in full or at all.
The full article can be read here...
http://www.howtolaw.co.nz/html/ml222.asp