—(1) No dividend shall be payable to the share-holders of any company except out of profits.
(1A) Subject to subsection (1B), any profits of a company applied towards the purchase or acquisition of its own shares in accordance with sections 76B to 76G shall not be payable as dividends to the shareholders of the company.
(1B) Subsection (1A) shall not apply to any part of the proceeds received by the company as consideration for the sale or disposal of treasury shares which the company has applied towards the profits of the company.
(1C) Any gains derived by the company from the sale or disposal of treasury shares shall not be payable as dividends to the shareholders of the company.
(2) Every director or manager of a company who wilfully pays or permits to be paid any dividend in contravention of this section —
shall, without prejudice to any other liability, be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months; and
shall also be liable to the creditors of the company for the amount of the debts due by the company to them respectively to the extent by which the dividends so paid have exceeded the profits and such amount may be recovered by the creditors or the liquidator suing on behalf of the creditors.
(3) If the whole amount is recovered from one director or from the manager he may recover contribution against any other person liable who has directed or consented to such payment.
(4) No liability by this section imposed on any person shall on the death of such person extend or pass to his executors or administrators nor shall the estate of any such person after his decease be made liable under this section.
(5) In this section, “dividend” includes bonus and payment by way of bonus.
[Aust., 1961, s. 376]