Dividend

Answers to your queries are:

1.   Whether it will be a Interim Dividend/ Final Dividend.

If it's is declared at AGM it will be Final.  Anything before AGM declared by the Board will be interim.

2.   Review by Audit Committee whether compulsory.-Secretarial Standard

Not mandatory

3.   Is there any formula for calculation of Dividend? How much profit will be approximately required to pay above mentioned amount of dividend.

    It depends on the profits made by the company and the management decision.

4.   If current years profits are insufficient to pay the said amount of dividend then can the dividend be paid partly out of current profit and partly out of accumulated profits? There is no GR. What is definition of Free Reserves?

   Yes. It can be made. Free Reseves means it's not set apart for any specific purpose viz., Capital Redemption Reserve meant for redemption of preference shares, etc.

5.   If it is Interim Dividend then is there any restriction of the Companies Act/Secretarial Standard to pay dividend out of Reserves.

    No restrictions.  However if it's paid out of reserves it cannot exceed 10%.

6.   Opening of Separate Dividend A/c is compulsory / or current a/c can be treated as ‘Dividend A/c’ by passing Board Resolution \.

Separate Dividend Account is to be opened by passing a BR

7.   Whether TDS has to be deducted from the amount of Dividend.

As per current rules no TDS to be deducted.  However the company has to pay Dividend Tax

8.   There are newly issued shares on 15^th March 2010.  Whether these shares will be eligible for dividend? If yes then whether proportionate or at par with existing shares?-Secretarial Standard 5.6 (Resolution for newly issued shares contain the provision that the shares shall rank parri passu with the existing shares)

If they are fully paid up shares then they are eligible for dividend at par with others

9.   If rate of dividend is less than 10% then whether it is necessary to Transfer to Reserves?

No

110.  Whether it is compulsory to set of Previous Losses/ previous Depreciation? Yes

Provisions of the Act: In case a company has incurred loss in any previous financial year or years, the amount of loss or an amount which is equal to the amount provided for depreciation for that previous financial year or those previous financial years, whichever is less, shall be set off against the profit of the company for the year for which Dividend is proposed to be declared or paid.

What is the Interpretation of the above provisions?

111.  If it is closely held Pub Co then whether provisions relating to ‘Record Date’ and ‘Book Closure’ are applicable?

       Record date is necessary for knowing the cut off date for eligibility of dividend which you can specify as AGM date. However no need for book closure.

112.  If the Dividend is declared in May 11 then whether it will be Dividend for FY 10-11 or 11-12?     

      It depends on the year for which the accounts are adopted and the dividend is approved by the Members in AGM.

113.  If it is Interim Dividend then whether ‘Regularization of Dividend is required in ensuing  AGM?

       Interim dividend needs to be approved by the members in AGM

A brief note on dividend is attached for your reference.

Thanks for the reply.

1. In my case we wish to declare dividend before AGM and the aooc*nts whcih will be considered shall be for the period 10-11 . So it will be mentioned in BR and Minues. To which year it will relate?

2. Income of the company for fy 10-11contains other income from sale of land. whether this income will be considered for calculation of Profit? Capital Gain Tax will also arise in this case so, I have to consider that also along with normal income tax and depreciation?

Regards,
Pooja

Long list of questions and answers actually helped me in revising the dividend provisions  thanks CS Pooja for raising so  many issues and also to Jayshree Ma;m for the replies 

Since the dividend is declared out of  2010-11 profits, the dividend declaration will be for the FY 2010-11.

All income would be considered subject however to capital gain tax if any and applicable IT.

Kind Attn Ms Jayshree Madam,

Dividend can be paid in Cash/Cheque /ECSor Dividend Warrant

I can understand Cash/Cheque Payment ,ECS Payment also but what is dividend Warrant which i cant understand how payment is made by dividend warrant

CAN U EXPLAIN AND SCAN AND ATTACH A PROFORMA OF  a dividend warrant  PLEASE

i WOULD ALSO lIKE TO KNOW IN THIS CONTEXT A SHARE Warrant too  can u scan and attach a proforma and explain that also please

 Thanks in advance

Kind Attn Jayshree Madam

can u explain me the following attachment with numerical examples so that a layman  like me can understand