Can Your Singapore Small Business Declare Monthly Dividends?

For Singapore small businesses, understanding how to manage dividend declarations is vital for maintaining financial health and satisfying shareholders. If you’re wondering whether your company can declare monthly dividends, this guide explains the legal requirements, types of dividends, and how corporate secretarial services in Singapore can help ensure your company stays compliant.

1. What Are Monthly Dividends?

Dividends are payments distributed to shareholders from a company’s profits. While many companies choose to pay dividends quarterly or annually, some small businesses prefer monthly dividends to provide shareholders with more regular income. Declaring monthly dividends is possible, provided the company’s financial position supports it and all legal requirements are met.

2. Can Your Singapore Small Business Declare Monthly Dividends?

Yes, your company can declare monthly dividends if:

• Dividends Are Paid Out of Profits
  Dividends must only be declared when the company has sufficient profits or retained earnings. Distributing dividends without available profits is illegal and may result in penalties for company directors.

• No Statutory Limit on Dividend Frequency
  Singapore law does not restrict how often dividends can be declared. The frequency is determined by your company’s dividend policy, which is set by the board and shareholders.
  

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3. Types of Dividends and Approval Process

It’s important to understand the difference between dividend types:

• Interim Dividends
  These can be declared and paid at any point during the financial year, usually approved by the board of directors without requiring shareholder consent.

• Final Dividends
  Declared after the company’s annual accounts are finalised, these require shareholder approval at the Annual General Meeting (AGM).

Key steps to declare dividends include:

• The board must pass a resolution recommending the dividend amount, considering the company’s profits and financial health.

• Proper documentation should be maintained, including board meeting minutes, dividend vouchers, and a dividend register.

• Shareholders approve final dividends at the AGM; interim dividends may be approved solely by the board.

4. Tax Treatment of Dividends in Singapore

A major advantage for Singapore small businesses is the favourable tax treatment:

• Dividends paid by resident companies under Singapore’s one-tier corporate tax system are tax-exempt for shareholders. This means shareholders do not have to pay tax on dividends they receive.

5. The Importance of Corporate Secretary Services in Singapore

Declaring dividends—especially monthly—requires strict compliance and accurate record-keeping. Corporate secretarial services can support your business by:

• Preparing and maintaining all necessary board resolutions and shareholder approvals.

• Keeping statutory registers and financial records updated.

• Advising on compliance with the Companies Act and related regulations to avoid legal issues.

• Assisting with administrative processes to ensure dividend declarations proceed smoothly and on time.

Summary

Your Singapore small business can indeed declare monthly dividends provided you comply with the legal requirement that dividends must be paid out of profits and follow proper procedures. There is no law restricting dividend frequency, but maintaining good corporate governance and proper documentation is essential. Corporate secretary services in Singapore play a key role in ensuring your dividend declarations comply with regulations and protect your company and shareholders.

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Running a company in Singapore can be challenging, but with professional support, it can be simple. Counto’s goal is to take away the complexities of compliance, and save you time and money throughout the year. To learn more, speak to us directly on our chatbot, email [email protected], or use our  contact form to get started.