PROCEDURE FOR DECLARATION OF FINAL DIVIDEND:
Board Meeting: Dividend shall be declared only on the recommendation of the Board, made at a meeting of the Board.
Where a company has an Audit Committee, this Committee shall consider the annual financial statements before submission to the Board. Dividend shall be recommended by the Board after consideration and approval of said financial statements.
Agenda of the Board Meeting;
Approval of Annual Accounts and Director’s Report (Director Report should mention the amount proposed to be declared as Dividend)
Recommendation of payment of Dividend to shareholders at the proposed rate at the AGM.
For approving the date, time and place of Annual General Meeting (AGM).
- Declaration of Dividend to be unconditional
All requisite approvals shall be obtained before declaration of Dividend. Dividend shall not be declared subject to any condition such as the approval of financial institutions/ banks or foreign collaborators or compliance with any other contractual obligation.
In case of Non –Resident Shareholder:
Application has to be made to the AD bank for remittance of dividend by Indian company to their non-resident shareholders.
The remittance may be allowed only if the authorised dealer is satisfied that the application is in order and is covered by the delegated authority.
As and when the remittance is allowed, one copy of the application should be submitted to the Reserve Bank.
- Dividend shall Declare only at Annual General Meeting:
Conduct the AGM at the scheduled time and place. Required quorum must be present at the meeting.
Members may declare a lower rate of Dividend than the rate recommended by the Board but have no power to increase the amount or rate of Dividend recommended by the Board.
- Opening of Special Account (Dividend Account) within 5 days of declaration of Dividend:
Every company is required to open a separate bank account for transfer of the amount of Dividend declared and the Dividend should be paid out of such bank account only.
The entire amount of Dividend should be transferred to this separate bank account for payment of Dividend to the members.
- Distribution/ Payment of Dividend:
Dividend must be paid within 30 days from the date of declaration (i.e within 30 days from the AGM).
- Unpaid Dividend Account:
In case of any amount remaining as unpaid/ unclaimed in the above separate bank account, Unpaid Dividend Account needs to be opened within seven days after the expiry of thirty days from the date of declaration of Dividend.
? Dividend, once declared, becomes a debt and shall not be revoked.
? Ascertainment of amount available for payment/distribution as Dividend.
OUT OF PROFIT
Dividend shall be paid out of the profits of the financial year for which such Dividend is sought to be declared and/or out of profits for any previous financial year(s) which remains undistributed after providing for depreciation in accordance with the provisions of the Companies Act, 2013.