dividend

NO,

iN THIS CASE, NO DIVIDEND AT ALL IS DECLARED BY THE COMPANY . SO WHAT AS CUM. PREF. SHAREHOLDERS WE CAN DO? PROFIT IS EARNED BY THE COMPANY BUT DISTRIBUTABLE PROFIT IS NOT?

mEENU

If you are cumulative preference shareholders then there is no need to worry. You may claim dividend of this year in the next year when there are distributable profits.

But for this year==NO

no, you can't claim for this year

 No. Cannot

no you cannot

All the above answers are half true.

The correct answer is as follows:

Though, the company has incurred Profit in the current year, Cummulative Prefrence Shareholder can not demand the dividend.

It is the duty of the company to pay dividend.

But, Company may pay dividend at any time in future.

Actully, the concept of Cummulative Prefrence shareholder came into existence for the following reason.

Shareholder will get the Dividend

&

Company shall pay dividend at any time in future. Company will not have compulsion to pay dividend each year.

If the company wants to accumulate the fund for the Expansion purpose, then it can retain the dividend money with it and pay the dividend in future.

Dear Learned Friend,

Let me tell you honestly you haven't add anything in the above mentioned answers.

Anyways i am sorry meenu for my half true answer.

Hi All,

From the above all discussion on this forum it was conculed that dividend cant be paid tp pref. shareholders as distributable profit is not there.

Kindly clarify, cumulative pref. shareholder can't even in this wrote to the company for the same. since we acquire the sahres we haven't received the dividend for once. As pref. shareholders what r our rights in this matter?

Meenu

To add this, other expenses of the companu increases from the last years. like payment to auditor, travelling expenses, festivel expenses etc. can't we object this?

If you are a cumulative pref. shareholder then you can claim previous year dividend subject to availability of distributable profits in the current and previous years. You may also go for legal action. Read carefully the terms of issue of preference shares.

Also refer some good law book for your law queries.

Your answer says NO, While my answer says it depends on the company's management.

That's the difference, Between My & Your answer.

Moreover I specified that Company can also dont declare dividend, though it has profit.

 It means we can claim the same. let the company should explain the reason for non declaration/ payment