Format of Board Resolution of declaring Interim Dividend & General Understanding

Format of Board Resolution of declaring Interim Dividend

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF __________________ (Name of the Company) HELD ON _____________________ (Date of the Meeting) AT THE ______________ (Registered/Corporate or Any other Place) OFFICE OF THE COMPANY SITUATED AT ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­________________ (Venue of the Meeting)

The Chairman apprised the Board about the management’s recommendation to declare an interim dividend of Rs. ___________ per share for the financial year ended 31^st March, ___________ to the members of the Company:

After deliberating over the matter, the Board resolved as follows: –

“RESOLVED THAT pursuant to the applicable provisions of the Companies Act, 2013, read with the relevant rules, if any framed thereunder, an interim dividend of Rs._______________, at the rate of ___________, on each fully paid-up equity share of Rs._______________ be paid out of the profits of the Company for the financial year ended 31^st March, ___________ to those Members whose names appear in the Register of Members as on __________________, being the Record Date for the payment of interim dividend.

RESOLVED FURTHER THAT the dividend account number ____________________ maintained with ______________________________________________ (Name & Address of the Bank), which was used for the purpose of payment of interim dividend for the financial year ended 31^st March, ­­­­­­­­­­­­­­­____________ and which does not have any unpaid dividend lying therein, be used for the purpose of disbursement of the interim dividend and a sum of Rs. _____________________________________ (Total Amount of Dividend declared) be deposited in the said account within 5 days from the date of declaration of interim dividend.

RESOLVED FURTHER THAT ______________________________________ (Name of the Officials authorized to conduct the proceedings of this Resolution) be and are hereby authorized to operate the said interim dividend account and to issue dividend warrants/cheques as per the limit mentioned hereunder:

and the Bank is hereby authorized to honour such warrants/cheques bearing the signatures of the authorized signatories of the Company by debiting the said interim dividend account.

RESOLVED FURTHER THAT the nomenclature of the interim dividend account be changed to ‘_________________________ (Name of the Company) – Unpaid Interim Dividend Account ____________ (Financial Year)’ on the 37^th day of declaration of interim dividend, if and when any sum remains unpaid/unclaimed in the said interim dividend account after the expiry of 30 days from the date of declaration of interim dividend.

Certified True Copy

Date: _________

For ________________ (Name of the Company)                                                             

____________________ (Name of the Director/Company Secretary, if any)

____________________ (Designation)

____________________ (DIN/Membership No. as the case may be)

______________________ (Address of the Director)

 General Understanding about Interim Dividend

• “Interim Dividend” means the Dividend declared by the Board of Directors & there is no need of Member’s approval

• The declaration of an interim dividend need not be only once a year, it may be at any time the directors choose & they may be several declarations in the course of 1 year

• The Board may declare Interim Dividend before the approval of Financial Statement & if the Financial Statement are already approved by the Board, then the declaration of Interim Dividend will not be possible for that Financial Year

• Interim Dividend shall not be declared at a rate higher than average dividend declared during the immediately preceding 3 (Three) financial years

• In the event of a loss or inadequacy of profits during a financial year, No Interim Dividend shall be declared/paid out of Free Reserves. However Final Dividend may be declared/paid out of Free Reserves subject to the prescribed conditions

• All requisite approvals shall be obtained before declaration of dividend (equally applicable to both Interim & Final)

• The Board should satisfy itself before declaring Interim Dividend, that the Interim Dividend will not endanger the ability of the Company to meet the other requirements such as paying dividend at the contracted rate on Preference Shares

• As we all know Preference Shareholders have the priority over Equity Shareholders in respect of payment of dividend but not in the case of Interim Dividend because there is no compulsion on the Board that it declares Interim Dividend on Equity Shares, it is necessary to declare Interim Dividend on Preference Shares also

• There is no right of the member to claim dividend from the Company even though the Company have sufficient amount of profits