Q.8) DEFINE DIVIDEND? DISCUSS DIFFERENT KINDS OF DIVIDEND.
DIFFERENCE BETWEEN DIVIDEND AND INTEREST.
The term dividend is given in the section to sub clause 35 of the companies act
2013.
A dividend is a portion of a company’s profits that is distributed to its
shareholders as a return on their investment. Dividends are typically paid in cash,
but they can also be issued in the form of additional shares (stock dividends) or
other forms as determined by the company's board of directors.
According to the Institute of chartered accountant of India, which defines
dividend as a distribution shareholders out of profits or reserve available for this
purpose.
According to the Supreme Court of India , a dividend is a portion of companies
profit that is distributed to the shareholder as return on their investment.
MEANING OF DIVIDEND
A dividend is a portion of a company’s profits that is distributed to its
shareholders as a return on their investment. Dividends are typically paid in cash,
but they can also be issued in the form of additional shares (stock dividends) or
other forms as determined by the company's board of directors
DEFINITION OF DIVIDEND (2 (35) )
ACCORDING TO SEC 2 (35)- A dividend is a portion of a company’s profits that is
distributed to its shareholders as a return on their investment.
According to the Institute of chartered accountant of India, which defines
dividend as a distribution shareholders out of profits or reserve available for this
purpose.
ELIGIBILITY FOR DIVIDENDS:
o Record Date: To receive dividends, shareholders must be on the company's
o register of members by a specified date called the record date. This ensures
that only shareholders who are registered on this date will be entitled to the
dividend.
o Ex-Dividend Date: The ex-dividend date is typically set a few days before the
record date. Shareholders who buy the stock on or after the ex-dividend date
will not be entitled to the upcoming dividend payment.
o Dividends and Types of Shares: Different classes of shares (e.g., preference
shares vs. ordinary shares) may have different dividend rights. Preference
shareholders typically receive a fixed dividend before ordinary shareholders
can receive any dividend, while ordinary shareholders are paid after
preference shareholders, and the dividend amount is usually variable.
TYPES OF DIVIDENT
1. CASH DIVIDEND:-
A Dividend payment in the form of cash. The most common
form of dividend payment, where shareholders receive a certain amount of
money per share. These are the most common type of dividends. This would
mean each shareholder would receive a certain dividend amount,
depending on how much stock they own.
2. STOCK DIVIDEND:-
As the name suggests, a Dividend payment in the form of
additional shares. Shareholders receive new shares instead of cash. This increases
the number of shares in circulation.
3. PROPERTY DIVIDEND:-
A Dividend payment in the form of tangible assets or
services. It is a Rarer form of dividend where shareholders receive physical goods
or services. A company gives its shareholders products that it produces, such as
wine from a vineyard or refrigerator company delivers refrigerator to thr share
holders.
Property dividend given only at the time when company has shortage of cash .
4. BOND DIVIDEND:-
Bond dividend is also known as a script dividend under
this, if the company does not have sufficient funds to pay cash dividend, the
company promised to pay the shareholder AT a future specific date with the help
of issue of bond or Notes.
5. INTERIM DIVIDEND:-
A Dividend payment within the financial year, before
the main dividend payment. This dividend is often paid after interim financial
statements and signals management's confidence in the financial health of the
company. A company pays an interim dividend after six months before paying the
main dividend for the year.
6. FINAL DIVIDEND:-
The final Dividend payment for the financial year, resolved
at the Annual General Meeting. This dividend is paid after the end of the financial
year and approval by the shareholders at the Annual General Meeting. A
company distributes a final dividend after the annual balance sheet.
7. LIQUIDATING DIVIDEND:-
A Dividend payment that comes from the
company's capital and not from profits. This dividend is often paid when a
company is liquidated. A company is dissolved and the remaining capital is
distributed to the shareholders.
