What to Prepare Before You Pay Dividends: Document Checklist for SMEs

📊 Did you know that over 70% of dividend disputes among SMEs in Singapore arise from missing or incomplete paperwork? Many business owners focus on profitability but overlook compliance when distributing dividends.

This guide walks you through the documents to declare dividends in Singapore, why they matter, and the sequence you must follow to avoid costly mistakes. Whether you are a first-time business owner or an experienced SME director, this checklist will help you declare dividends confidently and correctly.

TL;DR : What Documents Should You Prepare Before Paying Out Dividends

Before paying dividends in Singapore, SMEs must prepare the right documents to stay compliant and avoid shareholder disputes. Here’s the quick checklist:

• 📑 Audited accounts or management reports (depending on final vs interim dividends)
• 📝 Board & shareholder resolutions
• 📘 Meeting minutes for proper record-keeping
• 📋 Dividend registers to track entitlements
• 🎟️ Dividend vouchers for shareholder proof
• 📜 Warrants to shareholders as formal notices
• 🌏 Extra tax documents if distributing foreign-sourced dividends

Get the paperwork wrong, and you risk compliance issues with ACRA or IRAS. Get it right, and dividends become a powerful way to reward shareholders and strengthen trust.

Dividend Types & Why Documents Matter

Before diving into paperwork, it’s important to know the two types of dividends in Singapore:

• Interim Dividends: These are paid by the board of directors during the financial year before the annual accounts are finalised. They’re a sign of strong financial health, offering a pleasant surprise to investors.
• Final Dividends: These are declared at the end of the financial year and must be approved by the shareholders at the Annual General Meeting (AGM) based on the company’s audited financial statements.

Preparing the right documents to declare dividends in Singapore protects directors, reassures shareholders, and keeps you compliant with Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS). Without it, SMEs risk legal challenges, tax complications, and audit red flags. For a deeper look into these dividend types, read our companion guide on understanding dividends in Singapore.

Core Documents to Declare Dividends in Singapore (SMEs’ Checklist)

Here’s the essential paperwork SMEs should prepare before distributing dividends.

1. Audit-Related Documents

• Audited financial statements for final dividends.
• For interim dividends, audited accounts aren’t required, but up-to-date management accounts help justify the decision.

2. Board & Shareholder Approvals

• Board Resolution – Required for both interim and final dividends. Must pass with majority approval.
• Shareholder Resolution – Only needed for final dividends at the AGM.

3. Meeting Minutes

• Document all decisions made by directors and shareholders regarding dividends. This ensures transparency and accountability.

4. Dividend Registers

• Maintain a statutory record listing shareholders, dividend amounts, and payment dates. This register should be updated promptly.

5. Dividend Vouchers

• Provide shareholders with official vouchers stating the dividend amount, company details, and payment date. These also serve as proof during audits.

6. Warrants to Shareholders

• Issue warrants confirming shareholders’ entitlement to dividends. These act as formal notices of payment.

Special Case: Foreign-Sourced Dividends

If your SME distributes dividends from overseas subsidiaries, make sure you:

• Keep foreign tax credit certificates.
• Maintain remittance records and bank statements.
• Review double taxation agreements (DTAs) to avoid paying unnecessary taxes.

Missing this paperwork may lead to double taxation or penalties from IRAS.

The IRAS will grant a tax exemption on these dividends if two key conditions are met:

1. The income from which the dividend was paid was subject to tax in the foreign jurisdiction.
2. The highest corporate tax rate in that foreign jurisdiction is at least 15%.

To prove these conditions, you must prepare the necessary tax proof for foreign dividends, such as the audited accounts of the foreign company and a confirmation letter from the foreign tax authority.

Timing & Sequence Matters

Declaring dividends isn’t just about paperwork—it’s also about timing. Here are the four critical dates SMEs must track:

1. Declaration Date – The board of directors formally approves the dividend. Prepare a board resolution, draft meeting minutes, and ensure the company has sufficient profits available for distribution.
2. Ex-Dividend Date – This is the date a stock begins trading without the value of the dividend. Shareholders must own the stock before this date to receive the dividend.
3. Record Date – This confirms which shareholders are eligible for dividends. SMEs should maintain accurate registers and issue dividend vouchers to each shareholder.
4. Payment Date – Dividends are distributed to shareholders. Keep payment proofs, vouchers, and tax records (especially for foreign-sourced dividends) to stay audit-ready.

By following this sequence and preparing the right documents to declare dividends in Singapore, SMEs protect directors from liability, reassure shareholders, and avoid costly administrative errors.

Conclusion

Declaring dividends is more than a financial decision—it’s a legal and compliance process. By preparing the right documents to declare dividends in Singapore, SMEs can protect directors, build shareholder trust, and avoid unnecessary risks.

At Grof, we help SMEs streamline dividend declarations. From preparing resolutions to issuing vouchers, our accounting experts make sure every document is handled accurately.

👉 Stay compliant and stress-free: Speak to Grof’s accounting team today.

FAQs

1. Do I need audited accounts for interim dividends?
   No. But maintaining management accounts is advisable for accuracy and governance.
2. What’s the difference between a board resolution and a special resolution?

• A board resolution: passed by directors with majority approval.
• A special resolution: usually requires 75% shareholder approval.
  Dividend declarations typically need a board resolution (interim) and an ordinary shareholder resolution (final).

3. Can I skip the dividend voucher if we’re a small SME?
   No. Dividend vouchers are mandatory as proof of payment and protect your business during audits.
4. What if I forgot to include tax proof for foreign dividends?
   You may face double taxation. Always keep certificates, remittance records, and refer to DTAs for relief.