What exactly are dividends?

I'm not being paid my dividends, what do I do?

• I own a share in my dads small company, I get paid £15 per month, except I literally just remembered I even had a share... My dad stopped paying my dividends around 2 years ago due to bad financial times with the business, but everything has been fine for over a year and a half. It seems really rude of me to ask if I could receive them again because it seems as if I just want his money (which to some degree is true as I'm saving up for something). I don't wish for him to think I'm greedy, and I can just see what he'll say 'Oh, why didn't you tell me before' or, 'Are you desperate'? something like that... help! also, it is illegal to not pay dividends?

• Answer:

  As a small private company, the owners (including shareholders) can agree not to pay dividends, especially when times are hard financially. Your folks probably have not been paying themselves dividends either. Just ask your dad to explain how it works with dividends and then ask him about the shared you have in the family business. Show a genuine interest in learning and I'm sure he'll understand that you're not just money-grabbing and he'll explain it all to you. If you have the same sort of shares as your parents, they cannot pay themselves a dividend and then not pay you a dividend. However, because you never actually paid for your share(s), you might not actually own them in practice, so you might not be entitled to any money anyhow. If you legally own a share, you should have a share certificate as proof and you are entitled to any dividends that they pay to other shareholders. It might be a nice gesture to give any dividends to your folks (or agree to put it into a long-term fund for college that you can't just blow on stuff like parties and alcohol).