In the absence of an explicit power under section 34 or similar, the company must pay all dividends in cash (Wood v Odessa Waterworks Company (1889) 42 Ch D 636) or amend the articles. The transfer of money from one taxable investment account to another should be done in a certain way. When an investor receives the proceeds in cash, regardless of the court, capital gains taxes begin. There is no legal obligation to pay interim dividends, even if they have been approved by the directors, since the board of directors can revoke its previous decision to pay an interim dividend at any time until the date of actual payment. If no action has been taken to justify a legally binding liability through an instrument for recognition of the obligation to pay, the interim dividend should only be recognised when the asset is transferred. The main purpose of a liquidation is to liquidate the assets of the company so that the proceeds can be used to honor its liabilities and the surplus possibly distributed among the shareholders. However, it is not always necessary for the liquidator to value the assets and pay the proceeds to creditors in the form of dividends. The recent decision in Longley v. ACN 090 609 868 Pty Ltd (In liq) (formerly Solar Systems Pty Ltd) (2011) 81 ACSR 517 (Longley) shows that, in certain circumstances, a cash distribution is appropriate and permissible.
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