Limits related to dividend distributions (COVID-19)


Royal Decree-Law 18/2020, of 12 May, on social measures in defence of employment, establishes, among other measures, and from a corporate point of view, certain limits related to the distribution of dividends.

Article 5 of the aforementioned Royal Decree-Law establishes that companies that have availed themselves of temporary redundancy plans due to force majeure and have made use of the public resources allocated to them may not distribute dividends corresponding to the fiscal year in which these temporary redundancy plans are applied, i.e. they may not distribute dividends corresponding to the fiscal year 2020 affected by COVID-19, unless they previously pay the amount corresponding to the exemption applied to social security contributions.

This limitation on the distribution of dividends shall not apply to those entities which, as of 29 February 2020, had fewer than fifty employees, or persons treated as such, registered with the Social Security on 29 February 2020.

The aforementioned Royal Decree-Law does not limit the distribution of dividends corresponding to the financial year 2019, nor does it establish any limitation on the distribution of dividends to companies or other legal entities that have availed themselves of the temporary redundancy plans for economic, technical, organisational or production reasons related to COVID-19.

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