If a profit making company which has not been declaring dividend uptill now, wishes to reduce the rate at which its preference shares were issued, Is is possible? If yes, what is the procedure for change of rate?
Also i understand that payment of dividend is an appropraition of profits, but is there any provision regarding compulsory payment of dividend by a profit making entity to its preference shareholders?
In case of preference Shares, the terms of payment is as per the Issue document. So check for dividend payment.
In order to change the terms of dividend payment you have to get preference shareholder approval in writing of not less than 3/4 majority or by passing of Special resolution at seperate meeting of preference shareholders.
Also check if articles provide for any other compliance for change of terms of preference sharesholders
Kindly quote the relevant sections.
Thanks
Dear Ms. Aastha,
Fro changing in the rate of dividend in the preference shares, you check what your articles says and what at the time of passing of resolution such power was given ? If yes, then you can change your rate of interest.
Regards
CAclubindia
