Hargreaves Lansdown has admitted breaching company law on historic dividend payments to its shareholders, including founders Peter Hargreaves and Stephen Lansdown.
The Bristol-based firm said that it broke the law on a ‘technical’ basis, failing to justify the payment of dividends in company accounts.
Hargreaves is to convene an extraordinary general meeting next month to propose that shareholders will not be required to return dividends they received, nor will the firm make any additional payments.
The company also stressed that the issue ‘will have not have any effect on the company’s financial position’. Both Peter Hargreaves and Stephen Lansdown retain stakes of more than 10% in the firm.
‘The company has not satisfied certain procedural requirements of the acts before paying certain of the dividends in the years since the company's IPO [initial public offering],' it said in a statement.
'These procedural requirements relate to the failure to file interim accounts at Companies House which justified the payment of interim dividends or the payment of final dividends before the circulation to members of the audited accounts of the company in respect of the relevant financial year.'
The announcement comes as Hargreaves, led by chief executive ian Gorham (pictured), reported a profit rise of 21% in the second half of the year, although inflows fell by 16%.
Pre-tax profit for the period was£131 million, up from £108.1 million year-on-year, while net revenue rose 16% to £184.8 million in the six months to the end of December.
Total assets under administration increased by 19% to hit £70 billion, despite net business inflows dipping by 16% to £2.34 billion. This was largely down to market movements and sterling weakness.