Describe the procedure payment of dividend.
Ans. interim Dividend. The directors may declare and pay dividend before the closing of rile year to which it relates This is done in anticipation of prot;ts to be calculated at the end of the Year Tlus is known as it is generally paid for a period of six months and adjusted when the fnnal dividend is declared at the Annual General Meeting However, directors worlldbe held responsible if intenin dividend is paid on their initiative and no profits are as ailable at the end of tl;e yeal The rate of interim dh idend is decided carefully and it is usually lower than the talc of final dividend However there is no legal bar lo the directors paying final dividend at a loiyer rate then that Or the interim dividend
Lnterim dividend can be declared by the directors by passing a distribution off dividend distribution off dividendSanctio of the general meeting of shareholder. s not required for this purpose, unless the Anticles o hen use S he directors are held there is no
208 'S: SECRETARIAL PRACTICE
Th Articles of mast companies include provisions relating lo tl:e m :nnc r and method of distribution off dividend. Regulations 88 to 94 of Table A of Schedule I to the Act (mode I articles) contain the provisions regarding declaration and payment of and these regulations are adopted in the Articles of most companies.
PROCEDURE ON PAYMENT OF DIVIDEND
After the annual general meeting declares flee paytnent of dividend as per t :e recommendations of the Board of Directors, steps are taken to register and enter in the proper books the pending transfers and to balance the Shafe Register A list of members standing on the Register of Metnbers on the day of closing of the Reglster of Transfe Is is then prepared. fills is known as the Dividend List. It shows the naive and address of each mernber, his shareholding on that date, the gross dividend due. the incorne-tax to be dedneted and the net amount of dividend. Sometimes, instead of a list the names of members and other particulars are entered in a register known as Dividend Rerister. The entries made in the List or Register are carefully checked w ith the Register of and the calculations of gross dividend, income-tax and net dividend are also checked. Separate Lists or Registers may be prepared for different classes of shares. (A specunen of Dividend List is given on pages 1.3G4).
After the Dividend or Resister has been prepared and checked, dividend warrants are prepared for the shareholders from the List. After the dividend warrants are prepared. these are carefully checked and initial le:i by the authorities of the company and then signed. EN or warrant nnust be signed by two directors autllorised in this behalf or by the Sicretary alone is he is empowered to do,so. Arrangement is made to open a special account with the bank and necessary amount required to pay the dividend is transferred to that account. The bank will pay dividend out of this account against dividend warrants. A separate bank pass book is kept for this account which is periodically checked by the Secretary- with the dividend list and marked with the dividends already paid off
After tne signature of the warrants. the See retarv sends a notice to the newspapers for publication and sends the Divjdend Notice and Warrant by post to the registered address of the members. tinder Sechon 207 of the Companies Act the warrants must be posted
210 'S: SECRETARIAL PRACTICE
RETURN
Q. 48. Explain the legal provisions regarding annual r turn c- a company.
Anr. Annual Return. Every company having a share capita hi AL Al an Aimual Retorn vvilh the Registrar The first Annoal Rchlrn must be filch Wit]liil 18 months of incorporation and thereafter it must be submitted every N ear within 60 days of t tie annual general meeting (Sec. 159) The original ot the return is maintained at the registeied erp office of the company as part of the Register of Members
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