Dividend

1187 views 7 replies

CS Ankur Srivastava

Company Secretary & Compliance Officer

17858 Points Joined November 2008

The query is that if we allot new class of shares between Dec to March to the promoters’ group on preferential basis and in case we declare dividend. Whether dividend is to be paid fully or for the period the new shares remain outstanding.

My opinion:-

As we all know that the dividend is the profit of Company which is to be distributed among shareholders and it is always distributed on the basis of number of shares. Dividend does not have any relation with the period for which the shareholder or the shares remains outstanding. Therefore, in my opinion, the dividend is to be paid fully.

Confusion:-

Promoters have, initially invested in the money in the Company as Deposits and the Company is paying interest. However, in case the deposit holders withdraw the deposit after the period of 9 months, after getting the interest of 9 month of the financial year, and if they invested in shares they would be entitled for the dividend for whole year. They would get income twice on such money which would not be justifiable.

Please give your valuable opinion.

Replies (7)

Neha Gupta

PCS

377 Points Joined July 2010

Ankur Sir,

In my opinion, your Opinion is absolutely right.

All those share holders whose name is registered in the register of members of the Company before its (Register of Members) closure for any financial year are entailed to dividend, the period of their Shares holding does not effect to there entitlement to dividend. So they are entitled for the full year dividend.

And as far as your doubt is concern Sir ji,

You know the answer very well its in your opinion itself, yes the share holders will get both 9 months interest of Deposits and Dividend income (of full year) for their share holding, even if they do not hold shares for whole year.

Regards

Ankur Garg

Company Secretary and Compliance Officer

114788 Points Joined January 2009

Your confusion is totally baseless coz you are unnecessary comparing 2 different things...So just follow your own opinion and avoid confusion. I think that is enough for you.

Regards

RAKESH KUMAR SINGH

Practicing CS

39 Points Joined September 2010

Dear Ankur,

Please see the terms of allotment and if new issue is pari passu in all respect then your opinin is ok or else if it is mentioned that allotment is " pari passu ---------except that the dividend will be paid on pro rata basis then divided is payable for the period of holdings and it is alsways advisable to issue shares subject to pro rata basis as the dividend is rewartd for investment and it should be given according to time of investment

Prasanth Nair V

ACA ACS CWA Final Mcom

557 Points Joined September 2009

I think that the answer is somewhat different.

The person will be able to invest in the company only by acquiring the shares from somebody else (assumed no new issue has taken place).In such a case, he can acquire it only at cum-dividend price

ie.he is bound ti pay the dividend of 9 months to the seller, which forms part of the share price.

So, in my opinion, there is no such issue in this regard.