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Cummulative Preference Dividend

RAMANI NATARAJAN (Assistant General Manager - Finance) (56 Points)

18 November 2009

A Private Co., declared Preference Dividend (Cummulative Pref Shares) for the year 2005-06 but Pref Dividend provided in the books only during Mar'08. What is the time limit within which Preference Dividend Provided during Mar'08 should be paid.

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4 Replies

Avika, ACS (HR Legal and Management Consultant) (172 Points)
Replied 18 November 2009

In case of cumulative preference shares, the dividend is payable at the end of tenure along with the amount of redemption of shares.

Thanks & Regards,

Avika Kapoor

Manager-Business Development

Kapgrow Corporate Advisory Services Private Limited

E-173, Kalkaji, New Delhi-110019

Phone: 011-4055 3774

Mobile: 9310270884

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RAMANI NATARAJAN (Assistant General Manager - Finance) (56 Points)
Replied 18 November 2009

Thank you for your reply. Also kindly inform us which Section specify that Preference Dividend shall be paid at the end of tenure along with redemption.

Please also inform the meaning of "Tenure". Is it means end of each accounting year or month of redemption of Preference Share.

Avika, ACS (HR Legal and Management Consultant) (172 Points)
Replied 19 November 2009

Cumulative preference shares mean preference shares on which dividend is being accumulated and shall be paid at the time of redemption.

Tenure here means the total period for which the preference shares have been issued and not each financial year.

Thanks & Regards,

Avika Kapoor

Manager-Business Development

Kapgrow Corporate Advisory Services Private Limited

E-173, Kalkaji, New Delhi-110019

Phone: 011-4055 3774

Mobile: 9310270884

RAMANI NATARAJAN (Assistant General Manager - Finance) (56 Points)
Replied 19 November 2009

Thanks for your reply.

Kindly clarify the following to me:

1) If Cummulative Pref Share tenure is 6 years, then in such case whether Pref dividend shall be accumulated for 6 years and then paid along with redemption.

2) Is it necessary that at every AGM Pref dividend should be declared or shall the Pref dividend be declared at the 6th year before redemption and thereafter make payment for both Pref Dividend and redemption.