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CS Executive · Corporate Accounting and Financial Management · Dividend Decisions

Which statement about the shareholders' power to declare final dividend under the Companies Act, 2013 is correct?

Shareholders at the general meeting may approve the recommended final dividend or declare a lower amount, but cannot declare a dividend higher than what the Board has recommended. The power to propose the quantum rests with the Board under the Companies Act, 2013.

  1. AShareholders may declare dividend higher than the amount recommended by the Board
  2. BShareholders may declare dividend but cannot declare a higher amount than that recommended by the BoardCorrect
  3. CThe Board must always pay the dividend demanded by majority shareholders
  4. DShareholders can declare dividend without any recommendation from the Board

Explanation

Final dividend is recommended by the Board and declared by shareholders at the AGM. Shareholders can approve or reduce the amount but cannot increase it beyond the Board's recommendation.

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