Queries on dividend chapters
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
20 July 2016
Hi Experts/Colleagues
While studying Chapter Dividend, come across to following queries, Please help in detail.
1) 123(3) provides that interim dividend cannot be paid at the rate higher than the average rate of dividend declared in 3 preceding financial year if company incurred losses during current financial year up to the end of last quarter preceding the date of interim dividend.
Query- Does it means that, if there is a loss in last Quarter (Oct to Dec) (And Profit in aggregate for all 3 quarters (April to Dec)-----> Can co. declares interim dividend in such case??
2) Can Final Dividend be revoked once declared?
3) Can Interim Dividend be revoked once declared?
4) no claims shall lie against the Fund or the company in respect of individual amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims.--------> Does this means, that No payment shall be done to any person out of IEPF after expiry of 7 years?
I shall be thankful to you.
Thanks
While studying Chapter Dividend, come across to following queries, Please help in detail.
1) 123(3) provides that interim dividend cannot be paid at the rate higher than the average rate of dividend declared in 3 preceding financial year if company incurred losses during current financial year up to the end of last quarter preceding the date of interim dividend.
Query- Does it means that, if there is a loss in last Quarter (Oct to Dec) (And Profit in aggregate for all 3 quarters (April to Dec)-----> Can co. declares interim dividend in such case??
2) Can Final Dividend be revoked once declared?
3) Can Interim Dividend be revoked once declared?
4) no claims shall lie against the Fund or the company in respect of individual amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims.--------> Does this means, that No payment shall be done to any person out of IEPF after expiry of 7 years?
I shall be thankful to you.
Thanks
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 July 2016
Please resolve the queries.
Querist : Anonymous
Querist :
Anonymous
(Querist)
22 July 2016
Please resolve the queries.
10 August 2024
Here are detailed answers to your queries regarding dividends under the Companies Act:
### **1. Interim Dividend and Losses**
**Query:** Can a company declare an interim dividend if there is a loss in the last quarter (Oct to Dec), but there is a profit in aggregate for all three quarters (April to Dec)?
**Clarification:**
Section 123(3) of the Companies Act, 2013, outlines the conditions under which an interim dividend can be declared, particularly in relation to company profits and losses.
- **Interim Dividend Conditions:**
- If a company has incurred losses during the current financial year up to the end of the last quarter preceding the date of interim dividend, then the rate of interim dividend cannot exceed the average rate of dividend declared in the three preceding financial years.
- **In Your Scenario:**
- If the company has made a profit in aggregate for the period from April to December but has a loss in the last quarter (October to December), you must check the average dividend rate declared in the last three financial years.
- **Interim Dividend Calculation:** The company can declare an interim dividend if it adheres to the above rule. If the loss is in the last quarter, but the company has made a profit in the other quarters, the interim dividend can be declared as long as it does not exceed the average rate of dividend declared in the last three financial years.
### **2. Revoking Final Dividend**
**Query:** Can a final dividend be revoked once declared?
**Clarification:**
- **Final Dividend Declaration:**
- Once a final dividend is declared by the shareholders in the Annual General Meeting (AGM), it becomes a liability of the company, and the company must pay it as per the declaration.
- **Revocation of Final Dividend:**
- Generally, once declared, the final dividend cannot be revoked by the company. The decision to declare a final dividend is made by the shareholders, and it is legally binding.
### **3. Revoking Interim Dividend**
**Query:** Can an interim dividend be revoked once declared?
**Clarification:**
- **Interim Dividend:**
- An interim dividend is declared by the Board of Directors and can be revoked or adjusted by the Board before the final dividend declaration or before the company's financial year-end.
- **Revocation of Interim Dividend:**
- Yes, an interim dividend can be revoked by the Board of Directors before the financial year-end or before the final dividend is declared. The revocation must be done following the proper legal procedures and company policies.
### **4. Unclaimed Dividends and IEPF**
**Query:** Does the seven-year unclaimed period mean that no payment shall be made from IEPF after seven years?
**Clarification:**
- **Unclaimed Dividends:**
- As per Section 124 of the Companies Act, 2013, any amount that remains unclaimed and unpaid for a period of seven years from the date it first became due for payment will be transferred to the Investor Education and Protection Fund (IEPF).
- **Payment from IEPF:**
- Even after the amount is transferred to IEPF, the claimant can still make a claim from the IEPF. The seven-year rule refers to the transfer of unclaimed amounts to IEPF, not the inability to claim it thereafter.
- The claimant should approach IEPF for the recovery of the amount, and IEPF will process the claim as per the regulations.
### **Summary**
1. **Interim Dividend:** Can be declared if it adheres to the average rate of dividend declared in the last three financial years, even if there is a loss in the last quarter but profit in the preceding periods.
2. **Final Dividend:** Generally cannot be revoked once declared at the AGM.
3. **Interim Dividend:** Can be revoked by the Board before the end of the financial year.
4. **IEPF and Unclaimed Amounts:** Unclaimed amounts transferred to IEPF can still be claimed by the rightful owners even after the seven-year period.
If you need further clarification or have additional queries, please let me know!
### **1. Interim Dividend and Losses**
**Query:** Can a company declare an interim dividend if there is a loss in the last quarter (Oct to Dec), but there is a profit in aggregate for all three quarters (April to Dec)?
**Clarification:**
Section 123(3) of the Companies Act, 2013, outlines the conditions under which an interim dividend can be declared, particularly in relation to company profits and losses.
- **Interim Dividend Conditions:**
- If a company has incurred losses during the current financial year up to the end of the last quarter preceding the date of interim dividend, then the rate of interim dividend cannot exceed the average rate of dividend declared in the three preceding financial years.
- **In Your Scenario:**
- If the company has made a profit in aggregate for the period from April to December but has a loss in the last quarter (October to December), you must check the average dividend rate declared in the last three financial years.
- **Interim Dividend Calculation:** The company can declare an interim dividend if it adheres to the above rule. If the loss is in the last quarter, but the company has made a profit in the other quarters, the interim dividend can be declared as long as it does not exceed the average rate of dividend declared in the last three financial years.
### **2. Revoking Final Dividend**
**Query:** Can a final dividend be revoked once declared?
**Clarification:**
- **Final Dividend Declaration:**
- Once a final dividend is declared by the shareholders in the Annual General Meeting (AGM), it becomes a liability of the company, and the company must pay it as per the declaration.
- **Revocation of Final Dividend:**
- Generally, once declared, the final dividend cannot be revoked by the company. The decision to declare a final dividend is made by the shareholders, and it is legally binding.
### **3. Revoking Interim Dividend**
**Query:** Can an interim dividend be revoked once declared?
**Clarification:**
- **Interim Dividend:**
- An interim dividend is declared by the Board of Directors and can be revoked or adjusted by the Board before the final dividend declaration or before the company's financial year-end.
- **Revocation of Interim Dividend:**
- Yes, an interim dividend can be revoked by the Board of Directors before the financial year-end or before the final dividend is declared. The revocation must be done following the proper legal procedures and company policies.
### **4. Unclaimed Dividends and IEPF**
**Query:** Does the seven-year unclaimed period mean that no payment shall be made from IEPF after seven years?
**Clarification:**
- **Unclaimed Dividends:**
- As per Section 124 of the Companies Act, 2013, any amount that remains unclaimed and unpaid for a period of seven years from the date it first became due for payment will be transferred to the Investor Education and Protection Fund (IEPF).
- **Payment from IEPF:**
- Even after the amount is transferred to IEPF, the claimant can still make a claim from the IEPF. The seven-year rule refers to the transfer of unclaimed amounts to IEPF, not the inability to claim it thereafter.
- The claimant should approach IEPF for the recovery of the amount, and IEPF will process the claim as per the regulations.
### **Summary**
1. **Interim Dividend:** Can be declared if it adheres to the average rate of dividend declared in the last three financial years, even if there is a loss in the last quarter but profit in the preceding periods.
2. **Final Dividend:** Generally cannot be revoked once declared at the AGM.
3. **Interim Dividend:** Can be revoked by the Board before the end of the financial year.
4. **IEPF and Unclaimed Amounts:** Unclaimed amounts transferred to IEPF can still be claimed by the rightful owners even after the seven-year period.
If you need further clarification or have additional queries, please let me know!
10 August 2024
Here are detailed answers to your queries regarding dividends under the Companies Act:
### **1. Interim Dividend and Losses**
**Query:** Can a company declare an interim dividend if there is a loss in the last quarter (Oct to Dec), but there is a profit in aggregate for all three quarters (April to Dec)?
**Clarification:**
Section 123(3) of the Companies Act, 2013, outlines the conditions under which an interim dividend can be declared, particularly in relation to company profits and losses.
- **Interim Dividend Conditions:**
- If a company has incurred losses during the current financial year up to the end of the last quarter preceding the date of interim dividend, then the rate of interim dividend cannot exceed the average rate of dividend declared in the three preceding financial years.
- **In Your Scenario:**
- If the company has made a profit in aggregate for the period from April to December but has a loss in the last quarter (October to December), you must check the average dividend rate declared in the last three financial years.
- **Interim Dividend Calculation:** The company can declare an interim dividend if it adheres to the above rule. If the loss is in the last quarter, but the company has made a profit in the other quarters, the interim dividend can be declared as long as it does not exceed the average rate of dividend declared in the last three financial years.
### **2. Revoking Final Dividend**
**Query:** Can a final dividend be revoked once declared?
**Clarification:**
- **Final Dividend Declaration:**
- Once a final dividend is declared by the shareholders in the Annual General Meeting (AGM), it becomes a liability of the company, and the company must pay it as per the declaration.
- **Revocation of Final Dividend:**
- Generally, once declared, the final dividend cannot be revoked by the company. The decision to declare a final dividend is made by the shareholders, and it is legally binding.
### **3. Revoking Interim Dividend**
**Query:** Can an interim dividend be revoked once declared?
**Clarification:**
- **Interim Dividend:**
- An interim dividend is declared by the Board of Directors and can be revoked or adjusted by the Board before the final dividend declaration or before the company's financial year-end.
- **Revocation of Interim Dividend:**
- Yes, an interim dividend can be revoked by the Board of Directors before the financial year-end or before the final dividend is declared. The revocation must be done following the proper legal procedures and company policies.
### **4. Unclaimed Dividends and IEPF**
**Query:** Does the seven-year unclaimed period mean that no payment shall be made from IEPF after seven years?
**Clarification:**
- **Unclaimed Dividends:**
- As per Section 124 of the Companies Act, 2013, any amount that remains unclaimed and unpaid for a period of seven years from the date it first became due for payment will be transferred to the Investor Education and Protection Fund (IEPF).
- **Payment from IEPF:**
- Even after the amount is transferred to IEPF, the claimant can still make a claim from the IEPF. The seven-year rule refers to the transfer of unclaimed amounts to IEPF, not the inability to claim it thereafter.
- The claimant should approach IEPF for the recovery of the amount, and IEPF will process the claim as per the regulations.
### **Summary**
1. **Interim Dividend:** Can be declared if it adheres to the average rate of dividend declared in the last three financial years, even if there is a loss in the last quarter but profit in the preceding periods.
2. **Final Dividend:** Generally cannot be revoked once declared at the AGM.
3. **Interim Dividend:** Can be revoked by the Board before the end of the financial year.
4. **IEPF and Unclaimed Amounts:** Unclaimed amounts transferred to IEPF can still be claimed by the rightful owners even after the seven-year period.
If you need further clarification or have additional queries, please let me know!
### **1. Interim Dividend and Losses**
**Query:** Can a company declare an interim dividend if there is a loss in the last quarter (Oct to Dec), but there is a profit in aggregate for all three quarters (April to Dec)?
**Clarification:**
Section 123(3) of the Companies Act, 2013, outlines the conditions under which an interim dividend can be declared, particularly in relation to company profits and losses.
- **Interim Dividend Conditions:**
- If a company has incurred losses during the current financial year up to the end of the last quarter preceding the date of interim dividend, then the rate of interim dividend cannot exceed the average rate of dividend declared in the three preceding financial years.
- **In Your Scenario:**
- If the company has made a profit in aggregate for the period from April to December but has a loss in the last quarter (October to December), you must check the average dividend rate declared in the last three financial years.
- **Interim Dividend Calculation:** The company can declare an interim dividend if it adheres to the above rule. If the loss is in the last quarter, but the company has made a profit in the other quarters, the interim dividend can be declared as long as it does not exceed the average rate of dividend declared in the last three financial years.
### **2. Revoking Final Dividend**
**Query:** Can a final dividend be revoked once declared?
**Clarification:**
- **Final Dividend Declaration:**
- Once a final dividend is declared by the shareholders in the Annual General Meeting (AGM), it becomes a liability of the company, and the company must pay it as per the declaration.
- **Revocation of Final Dividend:**
- Generally, once declared, the final dividend cannot be revoked by the company. The decision to declare a final dividend is made by the shareholders, and it is legally binding.
### **3. Revoking Interim Dividend**
**Query:** Can an interim dividend be revoked once declared?
**Clarification:**
- **Interim Dividend:**
- An interim dividend is declared by the Board of Directors and can be revoked or adjusted by the Board before the final dividend declaration or before the company's financial year-end.
- **Revocation of Interim Dividend:**
- Yes, an interim dividend can be revoked by the Board of Directors before the financial year-end or before the final dividend is declared. The revocation must be done following the proper legal procedures and company policies.
### **4. Unclaimed Dividends and IEPF**
**Query:** Does the seven-year unclaimed period mean that no payment shall be made from IEPF after seven years?
**Clarification:**
- **Unclaimed Dividends:**
- As per Section 124 of the Companies Act, 2013, any amount that remains unclaimed and unpaid for a period of seven years from the date it first became due for payment will be transferred to the Investor Education and Protection Fund (IEPF).
- **Payment from IEPF:**
- Even after the amount is transferred to IEPF, the claimant can still make a claim from the IEPF. The seven-year rule refers to the transfer of unclaimed amounts to IEPF, not the inability to claim it thereafter.
- The claimant should approach IEPF for the recovery of the amount, and IEPF will process the claim as per the regulations.
### **Summary**
1. **Interim Dividend:** Can be declared if it adheres to the average rate of dividend declared in the last three financial years, even if there is a loss in the last quarter but profit in the preceding periods.
2. **Final Dividend:** Generally cannot be revoked once declared at the AGM.
3. **Interim Dividend:** Can be revoked by the Board before the end of the financial year.
4. **IEPF and Unclaimed Amounts:** Unclaimed amounts transferred to IEPF can still be claimed by the rightful owners even after the seven-year period.
If you need further clarification or have additional queries, please let me know!
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