CS Executive · Corporate Accounting and Financial Management · Dividend Decisions
A company has declared an interim dividend during the year. Which statement is correct as per the Companies Act, 2013?
The Board of Directors may declare interim dividend during the financial year without needing a general meeting. Only final dividend requires shareholder approval. If the company has losses in the preceding quarters, the interim rate is limited to the average of the last three years, not banned.
- AInterim dividend can be declared by the Board of Directors during the financial yearCorrect
- BInterim dividend can only be declared by shareholders in a general meeting
- CInterim dividend can be declared only after the close of the financial year
- DInterim dividend is not permitted for companies with losses in the current year under any circumstance
Explanation
The Board may declare interim dividend during any financial year or at any time between closing of the financial year and the AGM. Final dividend needs shareholders' approval, so the second option is wrong. If the company has incurred loss up to the end of the quarter preceding the declaration, interim dividend rate cannot exceed the average rate of the last three years, so it is not an absolute bar, and the fourth option is wrong.
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