Abstract

The article analyses the advance payment of expected dividends in a limited liability company, which focuses on the prerequisites for its payment laid down in Art. 199 § 1 of the Polish Commercial Companies Code. In accordance with art. 195 § 1 PCCC, a company is entitled to pay the advance on dividend if the „approved financial statements for the previous financial year show profit”. The analysis is also focused on the interpretation of the terms „profit” (which type of profit shall allow a company to pay a dividend advance: before or after taxes, operating profit, etc.), and what does „showing the profit” mean (which item of the financial statements should show aforementioned „profit”). Notwithstanding the above, no connection between payment of the advance on dividend and the entire procedure of preparing the financial statements and distributing profit was also critically analysed (i.e. the possibility of payment of a dividend advance despite the the fact that the financial statements have not been examined by an auditor).