declaration of dividend

[ajkumar kumar]

dear friends,

if company is making profit, it is compulsory to declare dividend?

if board does not want to declare dividend to preference shareholders , is it non compliance! pl guide me

Regards
Aj

[pooja joshi]

I dont think co should compulsory declare dividend even when it is
making profits. Its the decision of the Board whether to declare
dividend or not.


views solicited.

Regards,
Pooja

> --
> ************************************************
> Mail your comments, feedback and suggestions on CSMysore to Moderator:
> datta...@gmail.com and Manager: vivekhe...@gmail.com
>
> Find eNewsletters of ICSI Mysore at:
> www.icsi.edu/NewsEvents/enewsletters/tabid/1757/Default.aspx

[Premnarayan Tripathi]

Dear Friends,

1. I presume the matter is related with payment of dividend to Preference
shareholders only.

2. If it's cumulative preference shares, if Board is not declaring any
dividend, it will accumulate for next year.

3. If it's non-cumulative pref. shares, Board must have to declare dividend,
if there is profit.

4. Irrespective, it's cumulative or non-cumulative, if dividend are not
declared for a period of two years, preference shareholders will come in the
shoes of equity shareholders.

Thanks & regards,
CS. Premnarayan Tripathi
PRT & Associates,
Company Secretaries
201, Sarthik Square, Nr. GNFC Info Tower,
S G Highway, Ahmedabad - 380054
Tel: (O) 079 6545 1206
(M): +91 89800 26497
E-mail: premnar...@gmail.com

[Bidu Bhusan Dash]

Dear Premnarayan

I agreed with you in point no.1 & 2 but in point no.3.........where it is mentioned that if dividend will not be declared for a period of two years, preference shareholders will be treated as equity shareholders ?

Regards,

Bidu

[kameswara Rao Kappagantula]

the recommendation of dividend is Board prerogative right..

 

It their collectivve wisdon to recommned or not.

 

there is no provision in the Comnpanies Act, 1956 to compulsorily declare dividend.

 

Kamesh

[ajkumar kumar]

its non cumulative pref. shares and company is making profit, Board do not want to declare the divident to shareholders.

[Gaurav Kandpal]

Mandatory only in case of Cumulative Pref. Shareholders.....

Thanks & Regards
Gaurav Kandpal
(Company Secretary)
M/s. Banaras House Engineering Pvt. Ltd.
1114, 11th Floor, New Delhi House,
27, Barakhamba Road, New Delhi-110001.
Mbl. No. 9654968878
EXCELLENCE NEVER ALLOW FIXED RATE OF GROWTH

PROFESSIONAL LIFE - ENDLESS POSSIBILITIES WITH BORDERLESS SUCCESSES

“Please take care of the environment, print only if necessary”

[ajkumar kumar]

thanks, in that case co. is not under the compulsion to declare the dividend

[Premnarayan Tripathi]

Dear Friends,

 

Please find extract of Sec. 87 of the CA, 1956 for your reference with regard to consequences of non declaration of dividend of preference shares;

 

87. VOTING RIGHTS

(1) Subject to the provisions of section 89 and sub-section (2) of section 92 :

(a) every member of a company limited by shares and holding any equity share capital therein shall have a right to vote, in respect of such capital, on every resolution placed before the company ; and

(b) his voting right on a poll shall be in proportion to his share of the paid-up equity capital of the company.

 

(2)(a) Subject as aforesaid and save as provided in clause (b) of this sub-section, every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares.

Explanation. - Any resolution for winding up the company or for the repayment or reduction of its share capital shall be deemed directly to affect the rights attached to preference shares within the meaning of this clause.

(b) Subject as aforesaid, every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, be entitled to vote on every resolution placed before the company at any meeting, if the dividend due on such capital or any part of such dividend has remained unpaid -

(i) in the case of cumulative preference shares, in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting ; and

(ii) in the case of non-cumulative preference shares, either in respect of a period of not less than two years ending with the expiry of the financial year immediately preceding the commencement of the meeting or in respect of an aggregate period of not less than three years comprised in the six years ending with the expiry of the financial year aforesaid.

 

Thanks & regards,

CS. Premnarayan Tripathi

PRT & Associates,

Company Secretaries

201, Sarthik Square, Nr. GNFC Info Tower,

S G Highway, Ahmedabad - 380054

Tel: (O) 079 6545 1206

(M): +91 89800 26497

E-mail: premnar...@gmail.com

 

EXCELLENCE NEVER ALLOW FIXED RATE OF GROWTH

PROFESSIONAL LIFE - ENDLESS POSSIBILITIES WITH BORDERLESS SUCCESSES

“Please take care of the environment, print only if necessary”

 

--
************************************************
Mail your comments, feedback and suggestions on CSMysore to Moderator: datta...@gmail.com and Manager: vivekhe...@gmail.com
 
Find eNewsletters of ICSI Mysore at: www.icsi.edu/NewsEvents/enewsletters/tabid/1757/Default.aspx

 

--

[ajkumar kumar]

Thanks a lot