Mayuri Mehta (Senior Manager) (38 Points)
21 August 2012When can a private limited company declare its final dividend? Can a pvt. ltd. company declare interim dividend & final dividend within a gap of 5months. Suppose if interim dividend was declared on 31st october & final dividend is declared on 21st February. Please reply.
Interim dividend is the dividend paid by the Board at any time between two annual general meetings of the company. The Board may pay more than one interim dividend during a financial year. Thus, there is no prescribed time gap between payment of final dividend and the interim dividend. It can be even paid within a time gap of 5 months. The declaration of interim dividend depends much more on estimates and opinions than the declaration of final dividend which is made upon the information contained in a formal balance sheet. [Lucas v. Fitzgerald, (1903) 20 TLR 16, 18]. Prudence, however, requires that the Board of directors satisfies itself that the financial position of the company justifies the payment of interim dividend out of the profits available for distribution.
Regards,
Veeral Gandhi
CAclubindia
