According to This is Money UK, GW might have accidentally paid out millions of dollars in dividends illegally to shareholders.
Sales and profits are soaring at Games Workshop, according to their 2022-23 financial statement. However, from the looks of it, they may have made a colossal error when they paid out millions in dividends in 2022 to shareholders.
GW Accidentally Paid Out Millions Illegally?
While we’re no experts in UK financial laws, the following explanation comes from This is Money UK.
The owner of Warhammer battle figurines admitted yesterday that it accidentally paid investors millions in illegal dividends.
Games Workshop said that due to a ‘minor technical breach’ a 45p per share dividend was paid out last November before it filed its half-year accounts with Companies House.
That meant the payment amounted to an ‘unlawful dividend’.
While the mishap meant the firm could serve legal claims against its shareholders and directors, it said it would not do so and would table a resolution at its AGM in September to remedy the issue.
Well, it looks like things are still up in the air from the mishap, as Games Workshop said they would remedy the issues in September (2023). However, from the looks of it, not only did they pay out tons of interim dividends, they seemed to have done it illegally.
Games Workshop’s Statement
GW disclosed this issue in their 2022-23 statement on their investor’s page.
In addition to the usual business of the AGM, the Board has become aware of a technical issue with regard to the interim dividend of 45 pence per ordinary share paid by the Company to shareholders on 25 November 2022 (the “Interim Dividend”).
When the Company paid the Interim Dividend, the Company had sufficient distributable profits to do so and had prepared interim accounts showing the same, however those interim accounts were not filed at Companies House prior to the payment of the dividend. As a result, the Interim Dividend was paid in technical contravention of the Companies Act 2006. The Interim Dividend amounts to an unlawful dividend only to the extent that it exceeded the amount of distributable reserves available to pay the Interim Dividend shown in the prior audited accounts, being £700,000.
As a result of this minor technical breach, it is understood that the Company may have potential claims against shareholders who were recipients of the dividend and against its directors for declaring the dividend. The Company has no intention of bringing these claims.
This matter can be remedied by the shareholders passing a resolution which puts those shareholders and directors into the position in which they were intended to be. The Company is proposing a special resolution, which will ratify the appropriation of profits to the payment of the Interim Dividend, waive any rights of the Company against the shareholders who received the Interim Dividend (the “Relevant Shareholders”) and against the current directors and those persons who were directors of the Company at the time of the declaration and making of the Interim Dividend, being Kevin Rountree, Rachel Tongue, John Brewis, Randal Casson, Mark Lam, Karen (Kate) Marsh and Elaine O’Donnell (the “Relevant Directors”), in each case in respect of the Interim Dividend, and to approve the Company entering into deeds of release in favour of such Relevant Shareholders and Relevant Directors (the “Resolution”).The waiver will be capped at the maximum aggregate amount of the Interim Dividend (being approximately £14.8 million). The Company’s entry into the deeds of release will not have any effect on the Company’s financial position and no benefits will accrue to the Company as a result of doing so.
According to Games Workshop, a “technical issue” created this situation, and they seem to be downplaying it as a “minor” situation.
Companies Act of 2006
However, according to Google, the Companies Act of 2006 is a pretty significant piece of U.K. law and supposedly the primary source of governing corporations there.
It is also the longest-standing act in British parliamentary history, covering over 700 pages and 1,300 sections.
The Companies Act 2006 is the piece of legislation that serves as the main source for company law governing the UK. The Companies Act is notable for several reasons, not least the fact that it is the longest act in British parliamentary history, covering over 700 pages and 1,300 sections.
One of the primary purposes of The Act is to:
…specify the relationship between all parties involved in the company, i.e. shareholders, members and directors as stakeholders.
Either way, because of this “error,” it does appear Games Workshop may have paid out millions “illegally,” admitted the situation, and will attempt to fix the issue with their shareholders at their Annual General Meeting in September.
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About the Author: Travis Pasch
Travis Pasch
Job Title: Head Writer & Editor
Socials: @paschbass
About Travis Pasch: Travis has been a Warhammer 40k hobbyist since the 1990s, playing the game since Third Edition. Through extensive traveling, he’s seen a lot of the miniatures hobby from across the world, giving him a unique perspective on the latest gaming topics and trends.
Travis’s brother even owns a commission painting studio, where he’s picked up a lot of good advice and techniques for painting Warhammer and tabletop miniatures over the years, as well. Travis joined the Spikey Bits team in 2019 and has been the lead writer since 2020.
Currently, he’s working on converting all his 40k Adeptus Mechanicus models and becoming a true tech enjoyer, complete with both sad and happy robot noises!
