Elite Paint

TABLE OF CONTENTS

Introduction:

A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly. Dividends are usually given as cash (cash dividend), but they can also take the form of stock (stock dividend) or other property. Dividends provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends. The companies that offer dividends are most often companies that have progressed beyond the growth phase, and no longer benefit sufficiently by reinvesting their profits, so they usually choose to pay them out to their shareholders.

Dividend:

Dividends are distributions to stockholders of a corporation in a proportion to the number of shares held by the respective owners.

Types of dividends:

Dividends are the following types:

1. Regular Dividend

2. Interim Dividend

3. Cash Dividend

4. Stock dividends and stock splits

5. Scrip Dividend

6. Bond Dividends

7. Property Dividend

1. Regular Dividend: By dividend we mean regular dividend paid annually, proposed by the board of directors and approved by the shareholders in general meeting. It is also known as final dividend because it is usually paid after the finalization of accounts. It is generally paid in cash as a percentage of paid up capital, say 10 % or 15 % of the capital. Sometimes, it is paid per share. No dividend is paid on calls in advance or calls in arrears. The company is, however, authorized to make provisions in the Articles prohibiting the payment of dividend on shares having calls in arrears.

2. Interim Dividend: If Articles so permit, the directors may decide to pay dividend at any time between the two Annual General Meeting before finalizing the accounts. It is generally declared and paid when company has earned heavy profits or abnormal profits during the year and directors...