Ask upto 3 free GST queries and get trusted CA advice with CAclubindia Pro. Subscribe Now!

Allotment of shares and declaration of dividend

624 views 1 replies

Preeti Gandhi

Company Secretary

90 Points Joined May 2008

Dear All

Please guide me on the case;

The Board of directors of unlisted public company alloted shares to a non
member(preferential allotment) and also declared dividend and approved balance
sheet in the same meeting. The proposed dividend did not include the fresh
allotment of shares.

Whether on such shares dividend should be paid.

Thanks

Preeti

Replies (1)

RG - A Helping Hand

Company Secretary

13877 Points Joined May 2011

Hi,

Let me give you the practical answer. It’s a preferential allotment hence as per my understanding the same should be considered for the purpose of dividend to maintain friendly relations with the party subject to the approval of management, which is easily manageable by the company secretary. Further company law does not restrict div payment to this new allottee.

Further allotment and div recommendation is done in the board meeting hence book closure date is a bit far and near to the date of AGM. By this way also it is very much advisable to include the name of this new allottee for the purpose of dividend

Thanks