Re: [CharteredSecretaries] Interim Dividend paid - no final dividend. Whether requires confirmation at AGM?

[CS A Rengarajan]

Dear Bipinji

 

There is no point to continue the discussion . Your answers are silent on good corporate governance  Earlier interim dividend was not regularised. It was outside the scope of section 205 After the amendment, they brought specifically that Dividend includes interim dividend. It means prior approval for dividend will be taken and confirmation for interim dividend will be taken from shareholders.. Whereas in the case of interim dividend, the bod may declare only. The section says that they can delcare.  The Bod has been nominated by shareholders. Even though, the BOD declaring the dividend, as part of good secretarial practice and good corporate governance, the board may recommend to shareholders that all interim dividends  paid during the year be tretated as Final dividend for the particular year. We are talking about transparency and good corporate governance. Where it has gone for interim dividend.

 

MCA has revised schedule VI wherein lot of disclosures has been asked. As a professional, we need to emphasize good corporate governance. It means Sharholders of Listed companie can take interim dividend and need to confirm at Annual general meeting.  it is treated as back door entry for taking the dicidend amount. Finally confirmation at Annaul General meeting is a good secretarial practice as well as good corporate governance.

 

 

Finally i agree to disagree your point

 

Best Regards

 

 

On Sat, Sep 10, 2011 at 11:43 AM, BIPIN ACHARYA <bipins...@gmail.com> wrote:

 

Dear friends,

Very well explained submissions in direct response to my mail herein.

Tenor of my submission is: Under the scheme of the Companies Act, 1956, there is no requirement of regularisation of interim dividend at AGM.

At the AGM, the annual accounts are laid and therein, the amount of interim dividend paid during the financial year is duly disclosed. When the Accounts are adopted, all the transactions therein are also approved/adopted.

A careful reading of my " hypothetical" case in the mail herein would bear out that the shareholders at AGM not agreeing with the interim dividend paid may at the most not approve/adopt the annual accounts. I have not talked of the annual accounts being approved and then the interim dividend not being declared/approved  at AGM as has been misunderstood in the response to my mail.

Section 205 talks of the directors declaring and paying the interim dividend which is already quantified by them. So  the pre-requisites  of recommendation and declaration of interim dividend before its payments [ as in case of dividend to be declared at AGM ] are duly met with and this qualifies such interim dividend being included in the term dividend as provided in section 205.

Interim dividend which is declared and paid by the directors is a closed matter/ historical fact  so far as its finality is concerned. The shareholders at AGM have to declare the dividend. Interim dividend is already declared by the Board as required in section 205 before the the same has been paid.

Such a simple matter. One does not understand and appreciate as to why MCA Circular has spelt  out the requirement of  regularisation of  interim dividend at AGM.

charms,
bipin

On Fri, Sep 9, 2011 at 8:54 PM, CS A Rengarajan <csaren...@gmail.com> wrote:

 

Please ignore earlier mail and small corrections made here

 

regards

With Due respect to  age and experience of  Bipinji

 

I wish to express my opinion regarding interim dividend

 

Bipinji's hypothectical case members do not approve  the interim dividend   what will be the position., It cannot happen because they have already approved the accounts. For argument sake,, if they don't approve the interim  dividend, again you have to go back to revise the accounts i.e. change the accounts. That is why Article 85  of Table A says Dividend cannot be increased by the members.

 

 

Earlier there is no definition for dividend. Now There is a definition of dividend includes interim dividend

 

Board can only recommend but the shareholders can approve the same

 

Whttever provisions are applicable to dividend, the same will be applicable to interim dividend

 

Please refer 2010 edition of Ramiah book where page no. 2270 - 2271 clearly explains the interim dividend

 

As a good corporate governance, we should get shareholder approval for interim dividend

 

I feel companies act is supreme but circulars are taken by professionals conviently where its suits them, they can take and if it is not suits them, they will go as per Act

 

Even Secretarial standards issued by ICSI states interim dividend need not confirmed however i stand to disagree .

 

Very good companies are still confirming the interim dividend at General meeting.

 

Best Regards

 

---------- Forwarded message ----------
From: BIPIN ACHARYA <bipins...@gmail.com>
Date: Thu, Sep 8, 2011 at 7:16 PM

Subject: Re: [CS_yahoogroups) Interim Dividend paid - no final dividend. Whether requires confirmation at AGM?
To: company_...@yahoogroups.com

 

Dear friends,

All of us aware that shareholders of a company do not remain the same and they continue changing from time to time.

Interim dividend paid during a financial year to one set of shareholders by the Board of Directors. The same is duly disclosed in the Annual Accounts which are laid before the AGM.The fact is duly disclosed in Directors' Report which does not recommend anything about the interim dividend.

At the AGM, there are another set of shareholders who do not like this payment of interim dividend by the Board and do not approve the same.

What are the statutory consequences?
NIL.
The Board is duly authorised by the statute to declare and pay interim dividend. It has utilised its authority. The interim dividend is duly declared and paid during the financial year.The facts thereof are duly disclosed in the Annual Accounts and Directors' Report laid before AGM. In this background, the shareholders at the AGM do not have  to declare the interim dividend or do anything about the same.

On this issue, if the shareholders at the AGM, at the most, may not adopt the Annual Accounts. The same does not affect their finality . They will be uploaded with the statement of the fact of non-adoption and  the reason therefor. Then, all applicable statutory provisions would stand  duly complied with.

Under the scheme of the Companies Act, 1956, there is no requirement of regularisation of the interim dividend and the same finds place only in MCA Circular. Logic behind the circular needs to be elaborated in which behalf members of the Group are requested to help,please.

charms,
bipin

On Thu, Sep 8, 2011 at 10:38 AM, vemula poornima <vemula_...@yahoo.com> wrote:

 

Yes it has to be confirmed and take the approval of the shareholders at the agm.

---

From: SHIVARAM <cs.sbha...@gmail.com>
To: company_...@yahoogroups.com
Sent: Thu, 8 September, 2011 9:17:05 AM
Subject: [CS_yahoogroups) Interim Dividend paid - no final dividend. Whether requires confirmation at AGM?

 

Dear Colleagues,

I have a situation wherein Company has paid interim dividend. The Board is not recommending any further dividend to be declared at AGM.

Now, is there any requirement to confirm and /or approve the interim dividend paid at the AGM?

Following is the extracts from `Secretarial Standard' on dividend:

QUOTE:
7. Revocation of Dividend
7.1 Dividend, once declared, becomes a debt and should not be revoked.
Standard 7.1 shall also apply to Interim Dividend.
UNQUOTE:

Another extract from the same `Secretarial Standard' –

QUOTE:

2.4 Interim Dividend should be declared by the Board, at a meeting of the Board.

Declaration of Interim Dividend should not be made by a Committee of the Board nor by way of a Resolution passed by Circulation.

While final Dividend is recommended by the Board and declared by Members, approval of Members is not required for declaration of Interim Dividend. Where a company has an Audit Committee, this Committee should consider the interim financial statements which should then be submitted to the Board for consideration and declaration of Interim Dividend.
UNQUOTE:

For a moment even if we consider, `regularization of interim dividend' is necessary, suppose the shareholder decide otherwise – then what happens? Can the dividend paid be called back?

In view of the above, I am of the view that so called `regularisation of interim dividend' is uncalled for.

Views for learned members solicited.

CS SHIVARAM BHAT
Company Secretary

S/2 -206, Nova Cidade Complex, NH-17,
Alto Porvorim, Goa 403521.
Off: 91 832 2411911
Mobile: 9422058248

--
Bipin S. Acharya
Practising Company Secretary
CP 8      FCS 424
B/3, Ripple Apartments,
Near Hindu Mahila Milan Mandir,
Narayan Nagar,
Paldi, Ahmedabad- 380007
Ph: (079) 32516425
Mobile: 09327046425
email: bipins...@gmail.com
          bipins...@yahoo.com

 "You can if you think you can."
 "You can not change what you will not  confront."

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ALL COMPANY SECRETARIES - PROUD TO BE A MEMBER OF 10000 MEMBERS OF  CS BENEVOLENT FUND  FOR NOBLE CAUSE

- 

csarengarajan
Company Secretary, Chennai
email csarengarajan@gmail.com

http://www.csarengarajan.blogspot.com

mobile 093810 11200
SHARING KNOWLEDGE SKY IS THE LIMIT

This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.

--

ALL COMPANY SECRETARIES - PROUD TO BE A MEMBER OF 10000 MEMBERS OF  CS BENEVOLENT FUND  FOR NOBLE CAUSE

- 

csarengarajan
Company Secretary, Chennai
email csarengarajan@gmail.com

http://www.csarengarajan.blogspot.com

mobile 093810 11200
SHARING KNOWLEDGE SKY IS THE LIMIT

This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.

--
Bipin S. Acharya
Practising Company Secretary
CP 8      FCS 424
B/3, Ripple Apartments,
Near Hindu Mahila Milan Mandir,
Narayan Nagar,
Paldi, Ahmedabad- 380007
Ph: (079) 32516425
Mobile: 09327046425
email: bipins...@gmail.com
          bipins...@yahoo.com

 "You can if you think you can."
 "You can not change what you will not  confront."

--
Bipin S. Acharya
Practising Company Secretary
CP 8      FCS 424
B/3, Ripple Apartments,
Near Hindu Mahila Milan Mandir,
Narayan Nagar,
Paldi, Ahmedabad- 380007
Ph: (079) 32516425
Mobile: 09327046425
email: bipins...@gmail.com
          bipins...@yahoo.com

 "You can if you think you can."
 "You can not change what you will not  confront."

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ALL COMPANY SECRETARIES - PROUD TO BE A MEMBER OF 10000 MEMBERS OF  CS BENEVOLENT FUND  FOR NOBLE CAUSE

- 

csarengarajan
Company Secretary, Chennai
email csarengarajan@gmail.com

http://www.csarengarajan.blogspot.com

mobile 093810 11200
SHARING KNOWLEDGE SKY IS THE LIMIT

This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.