Dividend on Cumulative/non-cumulative preference Shares

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Sai krishna Medikonda (Querist)
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03 April 2009 Sir,

If a company has the profits in one financial year and not declaring any dividend to equity share capital, then:

1) Is it compulsory to declare dividend on Cumulative preference share capital.?

2) Is it compulsory to declare dividend on non-cumulative preference share capital?

Please resolve my query.

Thanks & regards,
Sai krishnaiah Medkikonda

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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03 April 2009 In any case preference dividend will not dependable on the equity dividend.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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04 April 2009 If sufficent profits are there then you have to declare dividend for non cumulative preference shares.

Ater paying them if sufficent profits are available you have to declare dividend for cumulative preference shares.

The balance will be avaialbe for equity holders. It depends on the company policy and growth either dividend can be declared or carried over for building a good reserves.

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