The distribution of dividends is the prerogative of the general assembly/meeting of the organization’s shareholders that puts this issue on the agenda. Depending on the degree of the company’s success, it can be considered once a quarter, six months or once a year. The latter option is the most preferable. It will allow estimating the most accurate income amount.
Decisions that determine the net income distribution shall be made exclusively by voting. If there is no quorum, this procedure can be rescheduled.The net income is distributed in the following areas:
- payments to the company’s founders;
- awarding of the company’s particularly distinguished employees;
- financing of the organization’s actual social programs;
- strengthening the enterprise’s financial reserves;
- replenishment of the priority funds;
- development of business activities.
The purposes that profit can be directed to are often stipulated in the company’s charter. In the same document, the terms during which payments should be made to the organization’s founders are also often set. In the latter case, these financial transactions shall be reflected in the accounting documents.
In other cases, the amount of annual income is announced after a specific date. As a result, this information is not to be reflected in the accounting documents for the last period.