Procedure For Declaration and Payment of Final
Dividend
(adsbygoogle = window.adsbygoogle || []).push({});
The
following steps are required to be taken by a company in respect of the declaration
and payment of final dividend:
following steps are required to be taken by a company in respect of the declaration
and payment of final dividend:
1. Issue notice for holding a meeting of
the Board of directors of the company to consider the matter. It must contain
time, date and venue of the meeting and details of the business to be
transacted thereat and must be sent to all the directors for the time being in
India and to all other directors, at their usual address in India.
the Board of directors of the company to consider the matter. It must contain
time, date and venue of the meeting and details of the business to be
transacted thereat and must be sent to all the directors for the time being in
India and to all other directors, at their usual address in India.
2. In the case of listed companies
notify stock exchange(s) where the securities of the company
are listed, at least 2 working days in advance of the
date of the meeting of its Board of Directors at which the recommendation of
final dividend is to be considered. [Clause 19 of listing agreement]
notify stock exchange(s) where the securities of the company
are listed, at least 2 working days in advance of the
date of the meeting of its Board of Directors at which the recommendation of
final dividend is to be considered. [Clause 19 of listing agreement]
3. Hold
Board meeting for the purpose of passing the following resolutions:
Board meeting for the purpose of passing the following resolutions:
(a) approving the annual accounts (balance
sheet and profit and loss account of the company for the year ended on 31st
March ………….);
sheet and profit and loss account of the company for the year ended on 31st
March ………….);
(b) recommending the quantum of final dividend
to be declared at the next annual
general meeting and the source of funds for the payment
thereof, i.e.:
to be declared at the next annual
general meeting and the source of funds for the payment
thereof, i.e.:
(i) out
of profits of the company after providing for depreciation for the current
financial year and also for earlier years, if not already provided and amount
to be transferred from the current profits to reserves; or
of profits of the company after providing for depreciation for the current
financial year and also for earlier years, if not already provided and amount
to be transferred from the current profits to reserves; or
(ii) out of reserves in accordance with the provisions of Rule 3 of the Companies (Declaration and Payment of Dividend), Rules, 2014.
(c) fixing time, date and venue for holding
the next annual general meeting of the company,
inter alia, for declaration of dividend recommended by the Board;
the next annual general meeting of the company,
inter alia, for declaration of dividend recommended by the Board;
(d) approving notice for the annual general
meeting and authorizing the company secretary or any competent person if the company
does not have a company
secretary to issue the notice
of the AGM on behalf of the
Board of directors of the company to all the members, directors and auditors of
the company and other persons entitled to receive the same.
meeting and authorizing the company secretary or any competent person if the company
does not have a company
secretary to issue the notice
of the AGM on behalf of the
Board of directors of the company to all the members, directors and auditors of
the company and other persons entitled to receive the same.
(e) determining the date of closure of the
register of members and the share transfer register of the company as per requirements of Section 91 of the Companies Act and the listing agreements (in the case of listed companies) signed by the company with the stock exchanges where the securities of the company are listed. In the case of listed companies, the
date of commencement of closure of the transfer books should not be on the day
following a holiday. The dates so
fixed should also not clash with the clearance program in the stock
exchanges. It is advisable to consult in advance the regional stock exchange
and then fix the dates for the closure of books.
register of members and the share transfer register of the company as per requirements of Section 91 of the Companies Act and the listing agreements (in the case of listed companies) signed by the company with the stock exchanges where the securities of the company are listed. In the case of listed companies, the
date of commencement of closure of the transfer books should not be on the day
following a holiday. The dates so
fixed should also not clash with the clearance program in the stock
exchanges. It is advisable to consult in advance the regional stock exchange
and then fix the dates for the closure of books.
4. The company
may transfer to reserves such percentage as it considers
appropriate of the current profits.
may transfer to reserves such percentage as it considers
appropriate of the current profits.
(adsbygoogle = window.adsbygoogle || []).push({});
5. In the case of a listed company, immediately within 15 minutes of
the conclusion of the Board meeting, intimate the stock exchanges with regard
to the Board’s decision about declaration and payment of dividend and the amounts
appropriated from reserves,
capital profits, accumulated profits of past years
or other special sources to provide wholly or partly for the dividend, by way of
a letter or telegram/fax [Clause 20 of listing
agreement]
the conclusion of the Board meeting, intimate the stock exchanges with regard
to the Board’s decision about declaration and payment of dividend and the amounts
appropriated from reserves,
capital profits, accumulated profits of past years
or other special sources to provide wholly or partly for the dividend, by way of
a letter or telegram/fax [Clause 20 of listing
agreement]
6. Publish
notice of book closure in a newspaper circulating in the district in which the registered office
of the company is situated at least seven days before the date of
commencement of book closure.
notice of book closure in a newspaper circulating in the district in which the registered office
of the company is situated at least seven days before the date of
commencement of book closure.
In
case of listed companies:
case of listed companies:
(i) To give notice of book closure
to the stock exchange at least 7 working days or as many days as the stock exchange may prescribe, before
the closure of transfer books or record date, stating the dates of closure of
its transfer books/record date.
to the stock exchange at least 7 working days or as many days as the stock exchange may prescribe, before
the closure of transfer books or record date, stating the dates of closure of
its transfer books/record date.
(ii) To send
the copies of notice stating the date of closure of the register of transfers
or record date, and specifying the purpose for which the register is closed or
the record date is fixed, to other recognized stock exchanges.
the copies of notice stating the date of closure of the register of transfers
or record date, and specifying the purpose for which the register is closed or
the record date is fixed, to other recognized stock exchanges.
(iii) Time
gap between two book closures would be at least 30 days.
gap between two book closures would be at least 30 days.
(iv) To declare
and disclose the dividend on per share basis only.
(Clause 16, 20A of listing agreement
read with Section 51 of Companies Act, 2013).
and disclose the dividend on per share basis only.
(Clause 16, 20A of listing agreement
read with Section 51 of Companies Act, 2013).
7. Close
the register of members and the share transfer register of the company.
the register of members and the share transfer register of the company.
8. The amount of dividend as recommended by
the Board of directors shall be shown in the Directors’ Report as appropriation of profits for the financial year to which
the Report relates.
The same amount
is shown in the Balance Sheet as at the end of the related financial
year as “Proposed Dividend” under the head “Current Liabilities &
Provisions”, Sub-head “Provisions”.
the Board of directors shall be shown in the Directors’ Report as appropriation of profits for the financial year to which
the Report relates.
The same amount
is shown in the Balance Sheet as at the end of the related financial
year as “Proposed Dividend” under the head “Current Liabilities &
Provisions”, Sub-head “Provisions”.
9. Hold a Board/committee meeting for approving registration of transfer/
transmission of the shares of the company, which have been lodged with
the company prior to the commencement of book closure. In compliance with the Board
resolution, register transfer/transmission of shares lodged
with the company prior to the date of commencement of the closure
of the register of members and mail the
share certificates to the
transferees after endorsing the shares in their names.
transmission of the shares of the company, which have been lodged with
the company prior to the commencement of book closure. In compliance with the Board
resolution, register transfer/transmission of shares lodged
with the company prior to the date of commencement of the closure
of the register of members and mail the
share certificates to the
transferees after endorsing the shares in their names.
10. Hold the annual general meeting and pass
an ordinary resolution declaring the payment of dividend to the shareholders of the company
as per the recommendation of the Board. The shareholders cannot
declare the final dividend
at a rate higher than the one recommended by the Board.
However, they may declare
the final dividend at a rate lower than the one recommended by the Board. The
following should be noted in this regard:
an ordinary resolution declaring the payment of dividend to the shareholders of the company
as per the recommendation of the Board. The shareholders cannot
declare the final dividend
at a rate higher than the one recommended by the Board.
However, they may declare
the final dividend at a rate lower than the one recommended by the Board. The
following should be noted in this regard:
(a) Once a
company has declared a dividend for a financial year at an annual general meeting, it cannot declare further dividend
at an extraordinary general meeting in
relation to the same financial year; it is beyond the powers of the company to do so, although the Companies Act does not prohibit the declaration of a dividend at a general meeting other than an annual general meeting.
company has declared a dividend for a financial year at an annual general meeting, it cannot declare further dividend
at an extraordinary general meeting in
relation to the same financial year; it is beyond the powers of the company to do so, although the Companies Act does not prohibit the declaration of a dividend at a general meeting other than an annual general meeting.
(b) Pro-rata means in proportion or proportionately, according
to a certain rate. It denotes a method of dividing something between a number of
participants in proportion to some factor. The profits of a company are shared,
pro rata, among the shareholders, i.e. in proportion to the number of
shares each shareholder holds.
to a certain rate. It denotes a method of dividing something between a number of
participants in proportion to some factor. The profits of a company are shared,
pro rata, among the shareholders, i.e. in proportion to the number of
shares each shareholder holds.
(c) In the case of preference shares,
dividend is always paid at a fixed rate. However, in the case of equity shares,
a dividend must be declared and paid according to the amounts paid or credited
as paid on the shares, i.e.,
according to the paid-up value of the shares.
dividend is always paid at a fixed rate. However, in the case of equity shares,
a dividend must be declared and paid according to the amounts paid or credited
as paid on the shares, i.e.,
according to the paid-up value of the shares.
(d) All dividends shall
be apportioned and paid proportionately to the amounts
paid or credited as paid on the shares during any portion or
portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank
for dividend as from a particular date such share shall rank for dividend
accordingly. [Schedule I, Table F, Article 83(3)].
be apportioned and paid proportionately to the amounts
paid or credited as paid on the shares during any portion or
portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank
for dividend as from a particular date such share shall rank for dividend
accordingly. [Schedule I, Table F, Article 83(3)].
11. Prepare
a statement of dividend in respect of each shareholder containing the following details:
a statement of dividend in respect of each shareholder containing the following details:
(a)
Name
and address of the shareholder with ledger folio no.
Name
and address of the shareholder with ledger folio no.
(b)
No.
of shares held.
No.
of shares held.
(c)
Dividend
payable.
Dividend
payable.
12. Ensure
that the dividend tax is paid to the tax authorities within the prescribed time.
that the dividend tax is paid to the tax authorities within the prescribed time.
13. The Issuer will fix and notify the stock
exchanges, at least twenty-one days in advance, of the date on and from which
the dividend on shares will be payable. [Clause 21 of listing agreement]
exchanges, at least twenty-one days in advance, of the date on and from which
the dividend on shares will be payable. [Clause 21 of listing agreement]
14. Round
off the amount of interim
dividend to the nearest rupee and where
such amount contains
part of a rupee consisting of paise then if such part is fifty paise or more it should be increased
to one rupee and if such part
is less than fifty paise it should be ignored.
off the amount of interim
dividend to the nearest rupee and where
such amount contains
part of a rupee consisting of paise then if such part is fifty paise or more it should be increased
to one rupee and if such part
is less than fifty paise it should be ignored.
15. Open
a separate bank account for making dividend
payment and credit
the said bank account with the
total amount of dividend payable within five days of declaration of dividend.
a separate bank account for making dividend
payment and credit
the said bank account with the
total amount of dividend payable within five days of declaration of dividend.
16. If the company
is listed, then for payment
of dividend it has to mandatorily use, either directly
or through its Registrars to
an Issue and Share Transfer Agent (RTI & STA),
any RBI (Reserve Bank of India) approved electronic mode of payment such as Electronic Clearing Services (ECS) [LECS (Local
ECS)/ RECS (Regional ECS) / NECS (National ECS)],
National Electronic Fund Transfer (NEFT),
etc. In order to enable usage of electronic
payment instruments, the company (or its RTI & STA) shall maintain requisite bank details of its investors as
per SEBI Circular No. CIR/MRD/DP/10/2013 dated March 21, 2013 in the manner as
stated aforesaid under the procedure for declaration and payment of interim
dividend.
is listed, then for payment
of dividend it has to mandatorily use, either directly
or through its Registrars to
an Issue and Share Transfer Agent (RTI & STA),
any RBI (Reserve Bank of India) approved electronic mode of payment such as Electronic Clearing Services (ECS) [LECS (Local
ECS)/ RECS (Regional ECS) / NECS (National ECS)],
National Electronic Fund Transfer (NEFT),
etc. In order to enable usage of electronic
payment instruments, the company (or its RTI & STA) shall maintain requisite bank details of its investors as
per SEBI Circular No. CIR/MRD/DP/10/2013 dated March 21, 2013 in the manner as
stated aforesaid under the procedure for declaration and payment of interim
dividend.
<!–CL Display 300×250 middle of blog with –>
(adsbygoogle = window.adsbygoogle || []).push({});
17. Make arrangements with the bank and in
collaboration with other banks if required, for payment of the Dividend Warrants at par at the centers
as determined by the Stock Exchanges
in case of listed company.
[Clause 21 of listing agreement]
collaboration with other banks if required, for payment of the Dividend Warrants at par at the centers
as determined by the Stock Exchanges
in case of listed company.
[Clause 21 of listing agreement]
18. To have
sufficient number of dividend warrants printed in consultation with the
company’s banker appointed for the purpose of dividend. To get approval of the RBI for printing the warrants with MICR facility. Get the dividend warrants filled
in and signed by the persons authorised by the
Board.
sufficient number of dividend warrants printed in consultation with the
company’s banker appointed for the purpose of dividend. To get approval of the RBI for printing the warrants with MICR facility. Get the dividend warrants filled
in and signed by the persons authorised by the
Board.
19. No RBI approval
required for payment
of dividend to shareholders abroad,
in case of investment made on repatriation basis.
required for payment
of dividend to shareholders abroad,
in case of investment made on repatriation basis.
20. Prepare
two copies of the list of members
with names and addresses only for mailing
purposes – one to
cut and paste on envelopes which could even be printed
on self sticking
labels and the other for securing
receipt from the Post Office.
two copies of the list of members
with names and addresses only for mailing
purposes – one to
cut and paste on envelopes which could even be printed
on self sticking
labels and the other for securing
receipt from the Post Office.
21. Where an
instrument of transfer has been received by company prior to book closure but
transfer of such shares has not been registered when the dividend
warrants were posted,
then keep the amount of dividend in special A/c called “Unpaid
Dividend Account” unless the registered holder of these shares, authorises
company in writing to pay dividend to the transferee specified in the said
instrument of transfer. (Section 206A)
instrument of transfer has been received by company prior to book closure but
transfer of such shares has not been registered when the dividend
warrants were posted,
then keep the amount of dividend in special A/c called “Unpaid
Dividend Account” unless the registered holder of these shares, authorises
company in writing to pay dividend to the transferee specified in the said
instrument of transfer. (Section 206A)
22. Dispatch dividend warrants within
thirty days of the declaration of dividend. In case of joint shareholders, dispatch the dividend
warrant to the first named shareholder.
thirty days of the declaration of dividend. In case of joint shareholders, dispatch the dividend
warrant to the first named shareholder.
23. Send
sufficient number of cancelled dividend
warrant forms with MICR code allotted by the RBI, to the bank or circulation to the branches
where the dividend warrants will be payable at
par.
sufficient number of cancelled dividend
warrant forms with MICR code allotted by the RBI, to the bank or circulation to the branches
where the dividend warrants will be payable at
par.
24. Instructions to all the specified branches
of the bank that dividend
should be paid at par should be sent
by the Bank.
of the bank that dividend
should be paid at par should be sent
by the Bank.
25. Publish a Company notice
in a newspaper circulating in the district
in which the registered office
of thecompany is situated to the effect
that dividend warrants
have been posted
and advising those members
of the company who do not receive
them within a period of fifteen days, to get in touch with the company
for appropriate action (in the case of listed companies, as a good practice).
in a newspaper circulating in the district
in which the registered office
of thecompany is situated to the effect
that dividend warrants
have been posted
and advising those members
of the company who do not receive
them within a period of fifteen days, to get in touch with the company
for appropriate action (in the case of listed companies, as a good practice).
26. Issue
bank drafts and/or
cheques to those members who inform that they received the dividend warrants after the expiry of their currency
period or their dividend warrants
were lost in transit after satisfying that the same have not been encashed.
bank drafts and/or
cheques to those members who inform that they received the dividend warrants after the expiry of their currency
period or their dividend warrants
were lost in transit after satisfying that the same have not been encashed.
27. Arrange
for transfer of unpaid or unclaimed dividend
to a special account named “Unpaid dividend
A/c” within 7 days after expiry of the period of 30 days of declaration
of final dividend.
for transfer of unpaid or unclaimed dividend
to a special account named “Unpaid dividend
A/c” within 7 days after expiry of the period of 30 days of declaration
of final dividend.
28. Identify the unclaimed amounts as
referred to in section 124 of the Act and, separately furnish and upload on
company’s own website and also on the Ministry of Corporate Affairs’ website or
any other website as may be specified by the Government, a statement or
information through e-Form 5 INV of Investor Education and Protection Fund (Uploading
of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, separately for each year, in the manner
as stated aforesaid under the procedure for
declaration and payment of interim dividend.
referred to in section 124 of the Act and, separately furnish and upload on
company’s own website and also on the Ministry of Corporate Affairs’ website or
any other website as may be specified by the Government, a statement or
information through e-Form 5 INV of Investor Education and Protection Fund (Uploading
of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, separately for each year, in the manner
as stated aforesaid under the procedure for
declaration and payment of interim dividend.
29. Transfer unpaid dividend amount to Investor Education and Protection Fund after the expiry of seven years from the date of transfer
to unpaid dividend
A/c. The company
when crediting to the account
of the fund, should
separately furnish to ROC a statement in e-Form 1 INV of IEPF (Awareness and Protection of
Investors) Rules, 2001 duly certified by chartered accountant or a company
secretary or a cost accountant practising in India or by the statutory auditors
of the company.
to unpaid dividend
A/c. The company
when crediting to the account
of the fund, should
separately furnish to ROC a statement in e-Form 1 INV of IEPF (Awareness and Protection of
Investors) Rules, 2001 duly certified by chartered accountant or a company
secretary or a cost accountant practising in India or by the statutory auditors
of the company.
Related Post :