Rate of dividend for cumulative preference shares

Hello!

I think its completely on Board's decision to decide the %age of rate of dividend. And Board of a company can decide independently about the ratio of dividend.

Any contrary views are welcomed.....

Regards

Nidhi

Hi,

Rate of dividend (whether on preference share capital or on equity share capital) can only be calculated based on  share capital of the company. However, in case of equity share capital, the rate is generally decided by the Board of directors every year based on profitability for that year in compliance of provisions of Section 205 of the Companies Act, 1956 BUT for preferene share capital, the company has to decide the rate of dividend at the time of issue of such preference shares only and not on the later date. Accordingly, in my opinon, it's not possible to fix the rate of dividend based on profitability of particular units of the company. Also in case of loss, company can't pay the dividend whether it's prference or equity. (As Branch A may be in loss and  and Branch B may be in profit and net effect of the both the branch may be net loss to the Company)

Regards

Cs Ashwini Kumar

Agree with answer of Mr Ashwini.

Rate of dividend is fixed at the time of issuanc of preference share capital and rate of such dividend is required to be prefixed before the respective preference share capital in case there is more than one class of preference share capital.

Regards- Sudhir

whether rateb of dividend regarding cumilative praference shares can b fixed by board of directors........