SUBRAMONY V
DIVIDEND
The term “Dividend” has been inclusively defined in the Companies Act, 1956, to the effect that it includes Interim Dividend. The Act neither specifically defines the term Dividend nor makes any distinction between interim and final Dividend. However they differ in the following as per ACT/Secretarial Standard 3.
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Sl. No.
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INTERIM DIVIDEND
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FINAL DIVIDEND
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1
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Declared by the Board
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Declared by the Shareholders
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2
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Can be declared only at Board Meeting and not by a committee of Board or by way of resolution passed by circulation
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Can be declared only at duly convened Annual General Meeting
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3
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Cannot be declared out of profits of pervious years or Free Reserves.
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Can be declared out of Free Reserves.
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4
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Can be declared only if company has made profit for the current year.
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Can be declared even if profits are in adequate or nil profits.
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5
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Approval of Members is not required.
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Approval of members is required.
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6
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Dividend can be paid after setting aside such sum as would be necessary to pay dividend to preference shareholders at contracted rate.
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Dividend can be paid only after payment has been made to preference shareholders.
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