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Dividend

Charu (nil) (122 Points)

28 December 2010

A listed company increased its paid up capital in May 2010 by alloting shares to promoters by way of preferential allotment. The record date for payment of dividend is fixed in mid september 2010. Are the additional shares allotted to promoters in May 2010 eligible to receive dividend on the basis of profit as on 31st March 2010?

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14 Replies

nidhigoel89 (Company Secretary ) (594 Points)
Replied 28 December 2010

Hello!

As per my point of view....all those person whose name is appeared on the register of member on the record date would b entitled to receive dividend.......

Chk and comply with all th requirements as given in listing agreement related to dividend declaration.

Regards

Nidhi

1 Like

Jaideep (Service) (1368 Points)
Replied 28 December 2010

It depends, how Board has pass the resolution for alloting shares. Plz check, whether dividend is provided on pro-rata basis.

Regards

Jaideep Pandya

1 Like

Charu (nil) (122 Points)
Replied 28 December 2010

Thanks nidhi & Jaideep.

The company has given undertaking to the Stock Exchanges that the shares issued rank pari passu with the existing equity shares of the company including Dividend.

In this case, will it be compulsory for the company to give dividend to such newly allotted shares?

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 28 December 2010

Yes. Since the record date is mid September 2010, the allottees of May 2010 shares will also be entitled to get the dividend.

Raman (CS) (33 Points)
Replied 28 December 2010

In the given case, The company has to pay Dividend on additional allotted shares during the year.

In case of annual Dividend, the persons who are members as on the date of Annual General Meeting will be eligible to receive the dividend as the dividend is approved by the members on the day when AGM is held.

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 28 December 2010

It will not be the AGM date. On the other hand, it will be the record date which is announced by the company before any corporate actions viz., declaration of dividend, right issue, bonus issue, etc..

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 28 December 2010

As on the date of Book Closure all the shareholders whose name is listed on the register of members are entitle to dividend.

Dividend is always paid on the basis of per share and not on the basis of period of holding etc.

Therefore, all the shares issued on the date of book closures shall be entitled to dividend equally.

ankit jain (CS trainee) (152 Points)
Replied 28 December 2010

Dear All,

I completely agree with Mr. Ankur and Ms. Jayashree,

The members whose name is entered in the Register of Member on record date will be eligible for the dividend.

Period of holding does not matter in case of dividend only shareholding on the record date matters.

Thanks to learned members

Raghunath Prasad (WORKING) (385 Points)
Replied 28 December 2010

Originally posted by : Raman
	In the given case, The company has to pay Dividend on additional allotted shares during the year. In case of annual Dividend, the persons who are members as on the date of Annual General Meeting will be eligible to receive the dividend as the dividend is approved by the members on the day when AGM is held.

agree

1 Like

Sandeep Pandey (CA FINAL) (1306 Points)
Replied 28 December 2010

As for my knowledge is concern as long as the name of member is appeared in the register of member on the date of AGM he is entitled for dividend......................

CA Nikhilesh Singla (CA) (83 Points)
Replied 28 December 2010

Yes new shares will also be entitled to get the dividend............

CA kuldeep kothari (own practice) (375 Points)
Replied 29 December 2010

In case issue new shares as it is in your case via preferential allotment. Since the company has filed statement with that the shares will rank pari pasu with the existing shares the new issued shares are entitled to receive dividend as thier name exist in members register as on the record date declared by the company. Had the terms of issue of new shares been decided that they will not participate in dividend the new shares wouldn't be eligible for participating in the dividend distribution irrespective of the fact thier name exist in members registes on record date