What to investigate and how: Ultra vires dividends: What should be done about ultra vires dividends?
In either of the two situations described at INS44290, the liquidator should be asked to consider recovering the dividend from the shareholder (who will commonly be a director too). Ultra vires dividends remain assets of the company by virtue of Section 277(1) Companies Act 1985 and therefore fall to be collected by the liquidator in the same way as any other asset. Where monies have been taken in regular weekly or monthly round sum amounts with the intention of determining later (perhaps at the stage of preparing accounts) whether the monies are to be described as dividends then the circumstances should be reported for consideration of Regulation 42(3), see INS44230.
