I move amendment No. 38:
In page 29, lines 26 to 29, to delete subsection (5) and substitute the following:
"(5) No dividend on shares shall be paid otherwise than out of—
(a) surplus funds in respect of the year in question (as ascertained under section 45) which are available for that purpose and have been accumulated after meeting the requirement for the statutory reserve; or
(b) a reserve set aside in previous years to provide for dividends.".
Mitchelstown Credit Union pointed out that section 30(5) was unnecessarily restrictive in requiring that the payment of dividends on shares be limited to the surplus funds of the preceding financial year. It was common practice of a number of credit unions to maintain dividend reserves. These reserves have been accumulated in years of good returns on credit union funds with a view to ensuring that in years of poorer financial return the annual dividend could be supported by funding from the dividend reserve. Clearly, this was a prudent practice which had developed over the years as a means of maintaining a reasonable level of dividend payments, thereby avoiding large swings in the amount of dividend declared on an annual basis. This amendment provides that dividends may be paid out of the surplus of a credit union in the preceding financial year and any reserves set aside in previous years for the payment of future dividends.
