Procedural Aspects Homework Help

Procedural Aspects

The important events and dates in the dividend payment procedure are:

1. Board Resolution: The dividend decision is the prerogative of the board of directors. Hence, the board of directors should in a formal meeting resolve to pay the dividend.

2. Shareholder Approval: The resolution of the board of directors to pay the dividend has to be approved by the shareholders in the annual general meeting. However, their approval is not required in the case of declaration of interim dividend. Further, it should be noted that the shareholders in the annual general meeting have neither the power to declare the dividends ( if the Board of Directors do not recommend it ) not to increase the amount of dividend. However, they can reduce the amount of the proposed dividend.

3. Record Date: The dividend is payable to shareholders whose names appear in the register of members as on the record date.

4. Dividend Payment: Once a dividend declaration has been made, dividend warrant must be posted within 30 days, Within a period of 7 days, after the expiry of 30 days, unpaid dividends must be transferred to a special account opened with a scheduled bank.

In the case of dematerialized shares (i.e., the shares held in electronic form), the corporate firms are required to collect the list of members holding shares in the depository and pay them the dividend.

5. Unpaid Dividend: if the money transferred to the unpaid dividend account in the scheduled hank remains unpaid unclaimed for a period of 7 years from the date of such transfer the company is required to transfer the same to the Investor, Education and Protection Fund established for the purpose.

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