If a company declared interim dividend and pay it. But in AGM if the same is disapproved. What will be the consequences? Kindly help me with proper section of company law. Waiting for responses
20 July 2012
If permitted by the Articles of Association of the company, the Directors can declare an interim dividend between two Annual General Meetings. Regulation 86 of Table A empowers the Board to pay to the members interim dividends. When the power for the purpose is vested in the Board, a resolution of the company in general meeting, which might be interpreted as direction to pay an interim dividend is a nullity. Shareholders themselves cannot usurp the powers which by the articles are vested in the Board of directors any more than the Board can usurp the powers vested by the articles in the general body of shareholders. [Shaw & Sons (Salford) Ltd. v. Shaw, (1935) 2KB 113 (CA)]. Members in general meeting cannot interfere with the exercise of the powers by the Board. When a company’s articles contain a provision as in Regulation 86, the power to pay the interim dividend can be exercised only by the Board, and a declaration of interim dividend by a general meeting will be void, unless a concurrent power to declare such a dividend is expressly conferred on it by the articles. [Scott v. Scott, (1943) 1 AII E.R. 582]. When the power to pay interim dividends is conferred on the Board, the company in general meeting cannot interfere with the exercise of that power, nor can it override the decision arrived at by the Board. Thus shareholders have no say in the matter of interim dividends.
20 July 2012
Interim Dividend is finally declared by the Board of Directors between two Annual General Meetings. The permission of shareholders is not required in this case.
In case of final dividend only the Board only recommends the dividend which is finally declared by the Shareholders.
However, in case of interim dividend the Board declare and distribute dividend nothing is to be approved by the shareholders.
23 July 2012
Kindly provide me the detail for the below mentioned query with proper section and rules:-
Example Year 2008 Share capital = 100 shares Dividend = Rs 1 per share so total Rs 100
year 2009 Issue of bonus share = 1:1 Bonus share = 100 Total share capital = 100+100=200 Shares Dividend for the year 2009 = ?
My query is that is it necessary that if a company issue bonus share then it should maintain the same rate of dividend on the share capital arised after issue of bonus share ( 200 shares ) Should Dividend for the year 2009 must be Rs. 100 ( since it was before issue of bonus share in 2008 ) or it can be less than rs 100 or it must be rs 200 or more (200 shares * Rs 1 per share ) Is there any boundation on rate of dividend after issue of bonus shares, Can it be lower than earlier year or may not be paid. Please provide view as soon as possible with the particular section and rules.
23 July 2012
Kindly provide me the detail for the below mentioned query with proper section and rules:-
Example Year 2008 Share capital = 100 shares Dividend = Rs 1 per share so total Rs 100
year 2009 Issue of bonus share = 1:1 Bonus share = 100 Total share capital = 100+100=200 Shares Dividend for the year 2009 = ?
My query is that is it necessary that if a company issue bonus share then it should maintain the same rate of dividend on the share capital arised after issue of bonus share ( 200 shares ) Should Dividend for the year 2009 must be Rs. 100 ( since it was before issue of bonus share in 2008 ) or it can be less than rs 100 or it must be rs 200 or more (200 shares * Rs 1 per share ) Is there any boundation on rate of dividend after issue of bonus shares, Can it be lower than earlier year or may not be paid. Please provide view as soon as possible with the particular section and rules.
24 July 2012
The dividend is depend on the fact that whether it is declared before the date of Bonus Issue of after the date.
The Company can use same Book Closure for the both issues as well and give Bonus and Dividend both to the existing shareholders i.e. 100
The Company may decide any rate of dividend it does not relate with the Bonus issue.
Bonus issue is the Capitalization of the earlier years profit and Dividend is the distribution of Current year profit.
Best way is to first declare dividend as it is the ordinary business and has to be taken first and then as special business declare the bonus shares use the same Book Closure for both.
In this case the Dividend would be 100 and the Bonus would be 100
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