♦ Meaning of Interim Dividend: As per section 123(3) of Companies Act, 2013, a dividend is said to be an Interim dividend, if it is declared by the Board of directors during any financial year out of surplus in the profit and loss account and out of profits of the financial year in which such interim dividend is sought to be declared.
Step 1: The Articles must provide power to pay Interim dividend and Board must be authorized to declare Interim dividend.
Step 2: A Board Meeting should be called by issuing a notice and rate at which dividend is payable must be specifically stated in the resolution passed. It must state time, date and venue of the meeting and details of the business to be transacted thereat and be sent to all the directors for the time being in India and to all other directors, at their usual address in India.
Step 3: At the Board meeting, following matters must be considered:
Step 4: Pass Board meeting resolution for payment of Interim dividend
Step 5: Prepare a statement of dividend in respect of each shareholder containing the following details:
(a) Name and address of the shareholder with ledger Folio No.
(b) No. of shares held.
(c) Dividend payable
Step 6: Ensure that the DIVIDEND DISTRIBUTION TAX is paid to the tax authorities within the prescribed time.
Effective Rate of DDT @ 16.995%. (15 % surcharge @10 % + EC @ 2 %+ SHEC @ %). It can be paid out of either current or accumulated profits. DDT shall be paid to Central government within 14 days from the date of declaration, distribution or payment of dividend whichever is earlier by the principal officer of the Company.
Step 7: No RBI approval is required for payment of dividend to shareholders abroad, in case of investment made on repatriation basis.
Step 8: It shall be payable in cash and may be paid by cheque or warrant or sent through the post direct to the registered address of the shareholder within 30 days of the declaration of dividend. In case of joint shareholders, dispatch the dividend warrant to the first named shareholder or as directed by them.
Step 9: Approval of dividend in next Annual General meeting.
(Author- CS Ritu Nagpal, AGM_corporate Law, G. K. Kedia & Co.)