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Mandatory to pay Dividend on Preference Shares

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KAUSHIK TRIVEDI

Assistant Company Secretary

23 Points Posted on 09 September 2021

It is mandatory to pay Dividend on Preference Shares??Please reply with provision in Companies Act. .

Replies (3)

Quick Summary

This discussion clarifies the rules around dividend payments for preference shares. While it's not always mandatory to pay preference dividends, even if profits exist, companies must pay preference shareholders before distributing any dividends to equity shareholders. If a company chooses not to pay preference dividends, it cannot pay equity dividends either.

Rama chary Rachakonda

Master in Accounts & high court Advocate

9620 Points Posted on 09 September 2021

No it is not compulsory to pay any dividend to Preference shareholders in case, there is Profit but company does not want to pay any dividend. But if company wishes to pay dividend to Equity shareholders it can do so only after paying dividend to Preference shareholders. ... Equity shareholders are owners of the Company.

Rajesh P. Dagdu

Associate with Chartered Accountant

57 Points Posted on 23 July 2022

RESPECTED SIR,

IN CASE OF FIXED % PREFERENCE SAHRE THEN CAN IT BECOME MANDATORY TO PAY DIVIDEND AT PRE DETERMINED DIVIDEND RATE FOR THE FINANCIAL YEAR 2021 2022 FOR PRIVATE LIMITED COMPANY