Section 254V — Corporations Act 2001 (Cth)

When does the company incur a debt?

(1) A company does not incur a debt merely by fixing the amount or time for payment of a dividend. The debt arises only when the time fixed for payment arrives and the decision to pay the dividend may be revoked at any time before then.

(2) However, if the company has a constitution and it provides for the declaration of dividends, the company incurs a debt when the dividend is declared.

Sourced from the Federal Register of Legislation at 17 May 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au. Verify the current text against the official source before relying on it.

Related sections

s 254SA — Companies limited by guarantee not to pay dividends
s 254T — Circumstances in which a dividend may be paid
s 254U — Other provisions about paying dividends (replaceable rule—see section 135)
s 254W — Dividend rights
s 254WA — Application of this Part to MCI mutual entities
s 254X — Notice to ASIC of share issue

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