§ Mr. Arthur Lewisasked the Chancellor of the Exchequer whether he will further define the criteria by which companies may pay dividends in excess of the Government's norm; and how he decides what is a binding dividend commitment entered into before 19th March, 1968.
§ Mr. DiamondPermissible dividend increases are governed by the considerations set out in Cmnd. 3590. In addition, companies have been allowed, after examination by the Treasury, to honour binding commitments entered into before the Budget, to remunerate additional share capital which has been genuinely subscribed for, and to increase dividends as a defensive measure against unwelcome takeover bids.
When considering pre-Budget commitments, the Treasury require documentary evidence showing that before 19th March, 1968 a company had specified a future dividend in connection with additional share capital issued for cash or other real value.