Repatriating distributable reserves

Repatriating distributable reserves meaning distributing dividends and other profits remains a core strategy for Gibraltar companies aiming to optimise cash flow to shareholders or parent entities under the jurisdiction’s flexible company law regime. Gibraltar law provides streamlined mechanisms for making such distributions but compliance with continuing solvency requirements and directors’ fiduciary duties is essential at every step.

Distributable Reserves under Gibraltar Law

Under Gibraltar law distributable reserves include accumulated profits and certain capital reserves provided the company remains solvent after the distribution. Dividends and in specie distributions (including distributions of non-cash assets) must be justified by company profits and reserves and follow both the company’s articles of association and statutory rules. Directors can choose to distribute either as interim dividends (at their discretion) or as final dividends (by shareholder resolution) and may structure capital contributions for flexible repatriation of funds.

Compliance and Practical Process

Every distribution or dividend must comply with statutory and contractual restrictions:

• The process requires board approval for interim dividends and shareholder approval for final dividends.

• Payments can be made in cash or with proper valuation and resolutions through non-cash means.

• Strict statutory rules prevent dividends from being paid out of certain capital pools (ie share premium account); these are strictly for distributable profits or reserves.

• Directors must ensure that distributions do not threaten the ongoing solvency of the company or breach their general duties.

If distributable reserves are insufficient companies may need to create new reserves or restructure (e.g. via share redemptions or capital reductions) and specialist advice should be sought.

How Hassans Can Assist

As specialists in Gibraltar company and commercial law Hassans offers comprehensive support on every aspect of distributable reserve repatriation:

• Advising on statutory and practical requirements for lawful dividend and distribution payments to ensure compliance with the Companies Act and articles of association.

• Drafting robust directors’ resolutions shareholder resolutions and notices required for each stage of the process.

• Structuring capital contributions and establishing optimal reserve strategies to ensure flexibility in future repatriations.

• Conducting solvency assessments preparing supporting documentation and advising directors on their duties to mitigate risk of personal liability.

• Supporting ongoing or one-off complex scenarios such as cross-border group structures or regulated entities tailoring advice for PE-backed and multinational groups.

• Providing ongoing legal and tax structuring insights including post-distribution compliance and governance.

Our service integrates legal practical and commercial expertise to ensure efficient compliant and optimal repatriation of profits and reserves under Gibraltar law positioning client businesses and investors for success.

Ready to optimise your Gibraltar entity’s distributions or require guidance on complex cross-border structuring? Contact me on matthew.torres@hassans.gi for tailored practical assistance at every stage.