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प्रश्न
Answer the following question.
Define Dividend and explain its features.
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उत्तर
Meaning:
- Term ‘Dividend’ is derived from the Latin word ‘Dividendum’ which means ‘that which is to be divided’.
- It is a part of the profits of the company that is distributed among the shareholders of the company.
- A dividend is ‘a share in distributable profits of the company to which the shareholder is entitled when it is formally declared by the company.’
- Usually, the term ‘Dividend’ refers to the Annual/final Dividend unless it is specifically mentioned as an Interim Dividend.
Definition:
- The Institute of Chartered Accountants of India (ICAI) has defined Dividend as, “a distribution to shareholders out of profits or reserves available for this purpose.”
- The Supreme Court has defined it as, “In case of going concern, it means portion of profits of a company, which is allotted to the holders of shares in a company.”
Features:
- It is the portion of the profits of the company paid to its shareholders.
- It is payable out of the profits of the company.
- A dividend is an unconditional payment made by the company.
- The company can pay dividends only to the shareholders viz. Equity and Preference.
- If the company has issued equity shares with differential rights as to dividend, the terms of issue of such shares will govern the rights of shareholders about receiving the dividend.
- The dividend cannot be declared out of capital.
- The dividend can be declared only on the recommendation of the Board of Directors.
- The dividend, as recommended by the Board of Directors, is approved and declared by a resolution passed at the Annual General Meeting by the shareholders.
- Dividend for any previous year cannot be declared once that year’s Annual Account has been approved in the AGM.
- Dividend once approved and declared by shareholders creates a debt. It cannot be revoked.
- The dividend includes Interim Dividend.
- The dividend must be paid in cash and not in kind.
- The dividend is to be paid on the paid-up value of shares.
- The dividend cannot be paid on calls paid in advance.
APPEARS IN
संबंधित प्रश्न
Select the correct answer from the options given below and rewrite the statement.
_________ is profit shared by company with a shareholder.
Final Dividend is declared by ______.
Dividend cannot be declared out of ______________.
Select the correct answer from the options given below and rewrite the statement.
Dividend amount should be transferred in a separate Bank Account within ____________ days of its declaration
Select the correct answer from the options given below and rewrite the statement.
Dividend should be paid within ________________ days of its declaration
Select the correct answer from the options given below and rewrite the statement.
__________ holders get dividend from residual profits.
Select the correct answer from the options given below and rewrite the statement.
_________ warrant is a cheque containing dividend amount sent by company to the shareholders.
Match the pairs.
| Group ‘A’ | Group ‘B’ |
| a) Dividend | 1) Equity Shareholders |
| b) Interest | 2) Appropriation of profit. |
| c) Interim Dividend | 3) Recommendation of Secretary. |
| d) Final Dividend | 4) Registrar of company. |
| e) Fluctuating Rate of Dividend | 5) Obligatory to pay |
| 6) Decided and Declared by the Board of Directors. | |
| 7) Decided by Board; declared by Members. | |
| 8) Decided by President of India. | |
| 9) Company not allowed to pay. | |
| 10) Declared by Govt. of India |
Write a word or a term or a phrase which can substitute the following statement.
The return on investment paid to the shareholders of the company.
Write a word or a term or a phrase which can substitute the following statement.
The meeting where the final dividend is declared.
Complete the sentence.
Word dividend is derived from Latin term ______.
Complete the sentence.
Dividend is paid to __________.
Answer in one sentence.
What is Dividend?
Select the correct option from the bracket.
| Group ‘A’ | Group ‘B’ |
| a) Dividendum | 1) ____________ |
| b) Interest | 2) ____________ |
| c) ____________ | 3) Final Dividend |
| d) ____________ | 4) Interim Dividend |
| e) Govt. Fund | 5) ____________ |
(Creditors, IEPF, Latin term, At Board Meeting, At AGM)
Select the correct option from the bracket.
| Group ‘A’ | Group ‘B’ |
| a) Preference Shares | 1) ____________ |
| b) Equity Shares | 2) ____________ |
| c) Deposit holders | 3) ____________ |
| d) ____________ | 4) Payment of Dividend |
| e) ____________ | 5) Dividend Declared but not paid/claimed |
(Unclaimed/Unpaid Dividend, Fixed rate Dividend, Dividend at a Fluctuating Rate, Interest, Within 30 days)
Explain the following term/concept.
Dividend
Explain the following term/concept.
Rate of Dividend.
Study the following case/situation and express your opinion :
LMN Co Limited decides to declare a dividend for the financial year 2018-19 in which it has earned profits less than their expectations.
- Is Board right in recommending a dividend of Rs. 5/- per share out of free reserves?
- Can Board declare the dividend though it is not approved by AGM?
- Can the Board give dividends in the form of gifts?
Answer in brief.
State any four points to be kept in mind by a Listed Company with respect to Dividend.
