dividend -urgent

Gargi Ranade (CS) (614 Points)

07 October 2009

Hi Dear all,

Kindly let me know ,

can Co. declare interim dividend on any class of share, Is it fine if co. declare interim dividend on equity shares without declaring it on preference shares.

Please let me know the relevent provision.

Thanks and regards,

Gargi

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5 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114679 Points)
Replied 07 October 2009

Hi Gargi,

It’s really nice to hear from you again. Trust you are doing file.

Yes. Company can declare Interim dividend on any class of shares.

In the case of Interim Dividend, while Preference Shareholders need not necessarily be paid Dividend before Interim Dividend is paid to equity shareholders, the Board should set aside such sum as would be necessary to pay Dividend to Preference Shareholders at the contracted rate.

Best Regards

Ankur Garg (Company Secretary and Compliance Officer) (114679 Points)
Replied 07 October 2009

Also go through the text below along with attached file.

Interim Dividend may be declared after the Board has considered the interim financial statements for the period for which Interim Dividend is to be declared and is satisfied that the financial position of the company justifies and can support such declaration. The interim financial statements so prepared should take into account depreciation for the full year, taxation including deferred tax and other anticipated losses for the year. The interim financial statements should also take into account the Dividend that would have to be paid at the contracted rate on preference shares.

The Board should also take into account the specified percentage required to be transferred to reserves before declaration of Interim Dividend. Such transfer should be affected while preparing final accounts for the year.

Where a company has issued equity shares with differential rights as to Dividend, Interim Dividend may, at the option of the Board, be declared on all or any one or more of the classes of such shares in accordance with the terms of issue.

In case Interim Dividend is declared on only one class of equity shares, the directors should ensure that the profit as shown in the interim financial statements is adequate to meet the Dividend that would have to be paid on the other classes of equity shares apart from the depreciation for the full year and arrears of depreciation, taxation including deferred tax, transfer to reserves, Dividend on preference shares issued, if any, and other anticipated losses for the year.

Attached File : 52 provisions related to dividend.pdf downloaded: 391 times

Gargi Ranade (CS) (614 Points)
Replied 07 October 2009

Thanks a ton Ankur Sir, I was expecting your urgent reply on my query.

Even I read somewhere that it is not mandatory but unfortunately I was unable to find out source then I realise that it is there in Secretarial Standered.

Thanks once again ,your quick reply always give great relief to person in crisis.

Ankur Garg (Company Secretary and Compliance Officer) (114679 Points)
Replied 07 October 2009

Thanks Gargi for kind words.

1 Like

Gaurav Kandpal (Company Secretary) (34 Points)
Replied 18 December 2012

Dear Ankur Ji,

You are very expert in all the segments of company law:

I have an query regarding the forgoing discussion over the dividend:

- A/c to General Transfer to Reserve, 1975 the percentage of profits have to transfer to General Reserve. In case company have losses during the financial years then how can we transfer the percentage to Reserves. Is there any other way to transfer of profit to reserves.