§ Mr. Bruce-Gardyne
asked the Chancellor of the Exchequer what limit he has 66W set, for purposes of his 3½ per cent. ceiling on dividend increases, on the period over which a company may refer back for recoupment of dividend reductions in previous years, and why; and why 1937 falls on one side of this limit and 1958 on the other.
§ Mr. Diamond
No single arbitrary limit has been set. The rule that a company may seek to restore its dividend to the level of an earlier year was designed to enable companies to reflect a recovery from misfortune and to meet a current shareholder's dividend expectation based on a more normal trend of distributable profits. But pre-war levels of distributable profits and rates of dividends are not regarded as a reasonable indicator of a current shareholder's expectations.