Waiver of entitlement to receive dividend

Simply taking undertaking will not be sufficient.  Sun Pharma and Sejal Glass had done this.   They had amended their Articles to provide for new clause of waiver of dividend.  You may refer their Articles:

https://www.sejalglass.co.in/download-library.H T M L#

 

Dear Mr. P.C.Agarwal----------Thank you for your reply. I have following doubts. 1. Companies Act is silent on " dividend waiver by a shareholder " 2. A suitable amendment of Articles of Association of the company is very much required to accept share holders proposal of " dividend waiver " 3. In case there is a request from a shareholder to " waive off dividend" and there is no corresponding provision in Articles of Association of the company, whether the company can take a plea that, since there is no provision in existing Articles, directors are not obliged to accept shareholders request. 4. On receipt of request from a shareholder , is it compulsory on the part of the company to go for amendment of Articles to oblige shareholder. regards Prasad gowra

1.  Yes, Companies  Act is  silent on waiver of dividend  since it is not common.  Above two listed companies have  done this based on legal opinions. 

2.  Enabling provision in articles is necessary since the same is binding on all members.

3.  Yes, in the absence of provision in articles, company can refuse to accept request of shareholder.

4.  Company  is  not  bound to amend articles on the request of any  shareholder.  As per  Sec.100(1)(a) members having one-tenth of voting power can call EGM  of members.  But passing resolution for amendment of articles requires approval of  3/4th members as special resolution.

 

Dear Mr. Agarwal------------ Sincere thanks for giving a detailed reply.

with regards

prasad gowra