COMPANY LAW- 2
(DATE- 26.04.23)
UNIT: DIVIDEND
S. Holder
INVESTMENT
COMPANY
(R.O.I)
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1.)
2.)
3.)
4.)
The board decides the dividend to be given by keeping in mind: 1. Availability of profits
2. Dividend policy. [(P.S.H. - FIXED) (E.S.H. – FLUCTUATING BUT
PROPORTIONAL to the investment in the company)]
1.) 100S.H X 10P.V = $1000
2.) 500S.H X 10P.V = $5000
D.R – 10% = $5000 X 10% => $500
Sec. 123:
Current year (depreciation)
Undistributed profit of the previous year
Combo 1&2
Money by C.G / S.G (guarantee)
THE INTERIM DIVIDEND CAN NOT BE REVOKED
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THE COMPANY GIVES DIVIDENDS TO THE SHAREHOLDER IN CASH
SAVING A/C.
DMAT A/C.
COMPANY (SHARE MARKET)
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Cumulative (Previous year + undistributed profit + current year profit) and non-cumulative
preference share (basically not issued) {DIVIDEND}
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Unpaid Dividend Sec. 124:
✓ The company needs to open an account with a scheduled bank with the name unpaid
dividend account.
✓ If the amount is unpaid after 7 years and if not claimed then it will go to Investor
Protection and Education fund (Sec. 125)
✓ In these cases, with the dividend even the shares will get transferred to the fund after
7 years.
Investor Protection and Education Fund (Sec. 125)
INPUT OF FUNDS:
✓ Donations given for this fund.
✓ Central government grant.
✓ R.O.I if any investment is been made from this fund.
OUTPUT OF FUND
✓ For the investor education promotion.
✓ It is used for a refund of unclaimed dividends or application money made for a
refund.
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✓ Losses that are suffered due to wrong actions of the shareholders or the debenture
holders.
✓ Legal expenses incurred in a suit.
✓ For any other purposes.
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Bonus Shares (Section 63)
✓ Capitalisation of profit.
✓ It is been given to the existing shareholders.
✓ It is given in the ratio proportional to the already invested amount.
✓ Share capital of the company increases.
➢ Eligibility of a company to give bonus shares: ✓ Flooded with profits.
✓ Liquid capital.
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➢ The legality of issuing the bonus share: ✓ A.O.A
✓ Ordinary resolution.
✓ B.O.D. will approve the rate at which the shares will be issued.
✓ Fully paid up / not to be partial.
Right to dividend, rights shares, and bonus shares to be held in abeyance pending
registration of transfer of shares (Section 126)
✓ The shareholder will not be getting the dividend, the amount will be transferred to the
unpaid dividend account.
✓ Bonus share will be held by the company till the time the transfer is made valid by the
company.
Punishment for failure to distribute dividends (Section 127)
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