ISG’s 2020 accounts reveal that directors only became aware during the year that a dividend paid to parent company Cathexis was not lawful but it has now attempted to rectify the issue.
The 2018 accounts show that ISG paid an interim dividend of £25m to its immediate parent in December 2018. This amount was immediately loaned back to the group with an eight-year term at an interest rate of 3.07%.
However, the 2020 accounts, published today, acknowledge the error with a footnote stating: “During the year, the directors became aware that, due to certain breaches of the Companies Act 2006, an historical dividend declared by the Company to its sole shareholder, Cathexis UK Holdings Limited in December 2018 was not lawful. To rectify this position (so far as possible), shareholder approval was given to 1) re-register the Company as a private limited company and 2) provide a release by the Company to Cathexis UK Holdings Limited of any liability to repay the December 2018 dividend to the Company. With both these actions executed during the year, the net impact on the Company’s level of realised profits as at 31 December 2020 is as if the December 2018 dividend had been lawful.”