Whether a listed company reverses decision of dividend payment once taken in board meeting?

FCS Deepak Pratap Singh | Last updated: 30 July 2025

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Once a dividend is declared by a company, it generally becomes a debt owed to shareholders and cannot be revoked without their consent. This applies to both final and interim dividends, although interim dividends can be cancelled before payment if no debt has been created. However, in exceptional circumstances like illegal declarations or severe financial distress, revocation might be possible, even if it requires shareholder approval.

As you are aware that Companies Act, 2013("the Act"), inter alia provides for declaration of dividend out of profits. Profit here is the net profit of a company, as determined for preparing financial statements, as per the provisions of Section 129 of the Act and after complying with all the applicable accounting standards notified under Section 133 of the Act. Section 2(35) of the Act states that the term 'dividend' includes any interim dividend. Section 123(1) of the Act inter-alia states th

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About the Author

FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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