Can You Give Legal Rules As Regard To The Payment Of Dividends?


1 Answers

Rabbia Pasha Profile
Rabbia Pasha answered
Legal rules as regard to payment of dividend
a) A company subject to the provision of Articles should pay the dividend to the shareholders out of in proportion to the shares.
b) A dividend becomes liability from the date; it is declared by the company and should be paid within 45 days of the date of declaration.
c) Dividend should be paid out of the profits of the company and not out of capital.
d) It is not necessary to divide whole of the profits among the shareholders. A certain percentage as decided by the directors can be transferred to the Reserve Fund of the company.

e) Dividend must be paid in cash unless there is an express authority to pay them in shares or debentures.
f) Dividend payable on the ordinary shares may vary according to the profits made by the company every year.
g) Directors who are a party to the payment of dividend on the capital of the company are jointly responsible to repay the amount.
h) The dividend on the bearer share is paid on the production or a coupon to the bankers of the company. The registered shareholders get the payment of dividend by means of a dividend warrant from the company bankers.

Answer Question