28 May New limitations on the distribution of dividends.
Royal Decree-law 18/2020, of 12 May, introduces limitations on the distribution of dividends in those companies that have applied ERTEs due to force majeure.
Royal Decree-law 18/2020, of 12 May, on social measures in the field of employment has introduced new measures in relation to temporary employment regulation files, including a limitation on the distribution of dividends.
Article 5 of this Royal Decree-law establishes that companies or other legal entities that take advantage of ERTEs due to force majeure and use the public funds allocated to them may not distribute dividends for fiscal tax year in which the ERTEs have been applied, unless they previously pay the amounts corresponding to the exemption applied to social security contributions.
Thus, this new limitation only applies to those companies that have applied ERTEs due to force majeure, leaving out of this limitation those that have applied ERTE’s due to economic, technical, organizational or production reasons. The article itself also introduces another exception, as this limitation will not apply to those entities that, on 29 February 2020, had less than 50 employees registered with the Social Security.
On the other hand, even when a company has applied an ERTE due to force majeure, the prohibition to distribute dividends is not absolute, since it allows it if the company previously reimburses the amounts corresponding to the exoneration applied to Social Security contributions.
However, the wording of the article regarding the fiscal year over which dividends cannot be distributed is what has generated the most doubts as it is not entirely clear. In any case, we consider by the literal wording of the article that the limitation to distribute dividends will be applicable to the fiscal year 2020, given that it is the fiscal year in which the ERTE has been applied, with consequences on the approval of the annual accounts by the General Meetings of Shareholders during 2021. Notwithstanding the foregoing, it should be noted that this limitation is easily circumvented, as the profits of that fiscal year can be allocated to voluntary reserves, which can be distributed at any time thereafter.
As a result, the companies affected by this limitation could distribute dividends this year from the results of fiscal year 2019, since no ERTE has been applied in that fiscal year.
If you have any doubts or queries about these new measures, you can contact us at info@matp.es
