What is a Dividend? Rules for Limited Companies

A dividend (utbytte) is value that a limited company (aksjeselskap) distributes to its shareholders. The most common form is money, but distributions can also occur in other forms. A profit does not automatically mean that the entire amount can or should be distributed.

Who Decides the Dividend?

The General Meeting (Generalforsamlingen) approves ordinary dividends based on a proposal from the board of directors. The General Meeting cannot usually approve a higher amount than the board proposes or agrees to. The decision is documented in minutes.

How Much Can Be Distributed?

The distribution must fall within the framework of the Companies Act (aksjeloven) and be based on approved financial statements or an interim balance sheet when the rules require it. After the distribution, the company must still have adequate equity and liquidity based on the business's risk and scope.

The board of directors must, therefore, assess future payments, investments, debt, and uncertainties. A lawful basis for distribution is not sufficient if the payment makes the financial situation indefensible.

Ordinary and Extraordinary Dividends

Ordinary dividends are typically decided in connection with the annual financial statements. Extraordinary dividends can be decided later based on an interim balance sheet and specific formal requirements. Taxation depends, among other things, on whether the recipient is an individual or a company.

Dividends on Proffi

Proffi should display approved dividends per financial year when the data is available, separated from the annual result and group contributions. Historical payments must have a source and date. Proffi should not calculate "available dividend" as a legal conclusion.