Whether Company can pay dividend @ 200%?
6 Replies
praveen
(Chartered Accountant)
(6971 Points)
Replied 05 June 2012
yes no problem at all.
But should be from profits and not from reserves
Arijit Bhattacharjee
(ACA, M.COM)
(407 Points)
Replied 06 June 2012
MR ZEAL, AN EXAMPLE FOR YOU:
THE PUBLIC COS ISSUE SHARE OF NOMINAL VALUE OF RS.10/- AT 30-40 TIME PREMIUM SAY AT 300-400RS. NOW YOU SEE, LITERALLY WHAT 20-30% DIVIDEND WOULD MEAN TO AN INVESTOR,
SOME 2-3 RS PER SHARE PER YEAR (ROI OF AROUND 1%),
THEREFORE IF THE OPTION OF TRANSFERING OF SHARES IS RESTRAINED........
THEN "NO ONE WOULD INVEST".....
THEREFORE HOW PRAGMATIC IT IS FOR A CO TO DECLARE SOME 200% DIVIDEND, WHICH FETCHES THE INVESTORS A RETURN OF AROUND 10%.............
FURTHER, THERES NO RESTRICTION ON SUCH DECLARATION OF DIVIDEND SUBJECT TO CERTAIN STIPULATION OF THE CO ACT
Arijit Bhattacharjee
(ACA, M.COM)
(407 Points)
Replied 06 June 2012
MR ZEAL, AN EXAMPLE FOR YOU:
THE PUBLIC COS ISSUE SHARE OF NOMINAL VALUE OF RS.10/- AT 30-40 TIME PREMIUM SAY AT 300-400RS. NOW YOU SEE, LITERALLY WHAT 20-30% DIVIDEND WOULD MEAN TO AN INVESTOR,
SOME 2-3 RS PER SHARE PER YEAR (ROI OF AROUND 1%),
THEREFORE IF THE OPTION OF TRANSFERING OF SHARES IS RESTRAINED........
THEN "NO ONE WOULD INVEST".....
THEREFORE HOW PRAGMATIC IT IS FOR A CO TO DECLARE SOME 200% DIVIDEND, WHICH FETCHES THE INVESTORS A RETURN OF AROUND 10%.............
FURTHER, THERES NO RESTRICTION ON SUCH DECLARATION OF DIVIDEND SUBJECT TO CERTAIN STIPULATION OF THE CO ACT
(Guest)
| Originally posted by : praveen | ||
 |
yes no problem at all. But should be from profits and not from reserves |
 |
Dividend should be declared only out of profits, Free Reserves or out of moneys provided by the Central
Government or State Government for this purpose in pursuance of a guarantee given by such Government.
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