Companies often payout a portion of its profits as dividends to the shareholders. Dividend payouts are a way to provide shareholders with a return on their investment. The board of directors issues a declaration stating how much will be paid out and over what timeframe. The dividend should be declared by the company on such rate at its annual general meeting as recommended by the board. The amount of dividend approved by the board cannot be exceeded by the company. Once the dividend is declared, it shall be debt that must be paid by the company to its shareholders. The shareholders may sue the company in case the dividend is not paid. A company must primarily adopt its books of accounts, and then only shall it be entitled to declare the dividend. A company without passing a resolution for the adoption of accounts cannot pass a resolution for the declaration and payment of dividend.

Pulkit Midha

8 resources

0

1

0

Like