Dividends that are paid where there is not a sufficient excess of assets over liabilities may involve a reduction of capital and may contravene the Corporations Act. Where a reduction of capital contravenes the Corporations Act:

a. The contravention does not invalidate the dividend payment but any director involved may be liable for a civil penalty order.

b. The contravention invalidates the dividend payment and any director involved may be liable for a civil penalty order.