dividend possible?

3. Changes to the dividend regime in the Corporations Act
There have been recent changes to the dividend regime in the Corporations Act, which came into effect on 28 June 2010. A new
section 254T has been included in the Corporations Act which introduces a three-tiered test that a company will need to satisfy
before paying a dividend. This replaces the previous test that a company may only pay dividends from profits.
The new section 254T provides that a company must not pay a dividend unless:
(a) the company?s assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the
payment of the dividend;
(b) the payment of the dividend is fair and reasonable to the company?s Shareholders as a whole; and
(c) the payment of the dividend does not materially prejudice the company?s ability to pay its creditors.
The Constitution of the Company currently reflects the former profits test and only permits dividends to be paid out of the profits
of the Company. Without the proposed change, if the Company wanted to pay a dividend, the Directors would need to ensure
that the dividend was not prohibited by section 254T and was paid from the profits of the Company.
The Board considers it appropriate to remove this additional restriction in the Constitution to allow more flexibility in the payment
of dividends. Resolution 3 (specifically, parts (f) to (j) of that resolution) seeks Shareholder approval to remove the references in
the Constitution restricting payment of dividends out of profits only, and to make consequential amendments so as to bring the
Constitution into line with Australian requirements and practice.