Under the Companies Act, 2013, a dividend is defined under Section 2(35) as an inclusive definition: “dividend includes any interim dividend.”. A dividend is a portion of a company’s profit distributed to its shareholders as a reward for their investment.
Source: It is generally paid out of the profits of the current year or accumulated profits of previous years after providing for depreciation.
Types:
Final Dividend: Declared at the Annual General Meeting (AGM) by the shareholders based on the recommendation of the Board of Directors.
Interim Dividend: Declared by the Board between two AGMs if profits permit.
Rule: Once a final dividend is declared, it becomes a debt due from the company to the shareholders and cannot be revoked.
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