DIVIDEND
DIVIDEND
DIVIDEND
Structure
17.0 Objectives
17.1 Introduction
17.2 Meaning of Dividend
17.2.1 Provisions Relating to Dividend
17.3 Sources of Dividend
17.3.1Declaration of Dividend
17.3.2Interim Dividend
17.4 Payment of Dividend
17.5 Unpaid Dividend
17.6 Investor Education and Protection Fund
17.7 Let Us Sum Up
17.8 Key Words
17.9 Answers to Check Your Progress
17.10 Terminal Questions
17.0 OBJECTIVES
After studying this Unit, you should be able to:
• explain the meaning of a dividend;
• describe provisions relating to dividend and its declaration;
• explain the sources of dividend and interim dividend;
• distinguish between paid and unpaid dividend; and
• explain Investor Education and Protection Fund.
17.1 INTRODUCTION
There is a difference between profit and divisible profit. All profits of a company
are not divisible. Divisible profits are profits available for distribution. The profit
available for dividend means profits which the directors consider should be
distributed after making provision for past losses, transfer to reserves or for
other purposes. In this unit you will learn about meaning and provisions relating
to dividend, sources of dividend, declaration of dividend, You will also learn
about payment of dividend, unpaid dividend and investor education and
protection fund.
336 Penalty : In case of failure to distribute dividend, every director of the company,
if he is knowingly a party to the default, be punishable with imprisonment which Dividend
may extend to two years and with fine, which shall not be less than one thousand
rupees for every day during which such a default continues and company shall
be liable to pay simple interest at the rate of eighteen percent per annum during
the period for which such default continues
Defences:
a) Where the dividend could not be paid by reason of the operation of any
law.
b) Where a shareholder has given direction to the company regarding the
payment of dividend and those directions cannot be complied with and
the same has been communicated to him.
c) Where there is a dispute regarding the right to receive the dividend.
d) Where dividend has been lawfully adjusted by the company against any
sum due to it.
e) Where for any other reasons, failure to pay the dividend or to post the
warrant within the specified period was not due to any default on the part
of the company.
Note: These questions will help you to understand the unit better.
Try to write answers for them but do not submit your answers to the
University. These are for your practice only.
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