Become a Govt. Certified GST Practitioner. Batch begins 18th Nov. Register Now!

Dividend

01 August 2009

A company had capital of 20,00,000 on 31 march 2009. It raised further 10,00,000 on 31 march 2009. on 15 july directors declare dividend. But they do not want to pay dividend on new shares which they raised. Is this allowed?

Reply
Follow
Share

4 Replies

Rahul Chobdar (Chartered Accountant (Financial Management)) (561 Points)
Replied 01 August 2009

The dividend will have to be paid on the whole share capital because the new shares are issued during the Financial Year & accordingly are eligible for dividend pertaining to F.Y. 2008-09.

Upgrade to CAclubindia Pro. Subscribe Now!

Ajay Mishra (Company Secretary) (74337 Points)
Replied 01 August 2009

Dear Mr. Krutsesh Patel

A company may close register of members for the purpose of ascertaining who are eligible to receive dividends on the date of declaration of dividend. In case of the AGM, the persons who are members as on the date of AGM will be eligible to receive the dividend as the dividend is approved by the members on the day when the AGM is held.

So on the date of AGM the fresh alottee (new Shareholder) will also be eligible to dividend. The new share will also cover for dividend.

Regards

Ekta (Practicing CS) (423 Points)
Replied 01 August 2009

Yah, The share holders as on the record date shall be eligible for the dividend declared in the AGM. Old as well as new share holders (allottees for the 31st March, 2009 allotment) shall be eligible for DIvidend.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 02 August 2009

Yes, shares allotted on 31.3.09 will also be eligible for dividend. However, subject to the provisions of your Articles, dividend can be declared and paid on new shares on pro-rata basis and in that case they will get dividend for one day only.