Every Company requires funds to work its business efficiently. Shareholders are an integral part of every company where they raise funds and in the process of same become its stakeholders. They have a say over the share of profits in proportion to the money they invest. This share of profit by shareholders is termed as dividend. Section 2 (35) of the Companies Act, 2013, while defining the term dividend simply states that “dividend” includes any interim dividend. As we may gather, this definition only throws light on the scope of the term „dividend? by including „interim dividend? in its fold. A dividend is a part of distributable profits whose payment is made by a company to its shareholders. In simpler words, it is usually a distribution of profits i.e. a portion of profits earned and allocated as payable to the shareholders whenever declared. There are two kinds of dividends: Interim dividends and Final dividends.

INTERIM DIVIDEND :

The Act defines Dividend in terms of interim dividends5 which refer to the dividend declared by company’s board during any time of the year before official closing of financial year and calling of Annual General Meeting. According to the Act the enterprise can declare interim dividend out of profits accumulated of current or previous financial years

FINAL DIVIDENDS

When the dividend is announced at the Annual General Meeting of the corporation, it is known as „final dividend?. The dividends are announced by the corporation after the end of the financial year and approval of Board of Directors in AGM. The term Dividend used except in the definition in Companies Act, 2013 refers to final dividends only. Most of the provisions for both Interim and Final are same but there are some differentiated provisions for the Interim dividends in the Act. The liability on bankruptcy arises only in case of announcement of Final Dividend and not Interim dividend. The rate at which dividend needs to be declared and paid shall be recommended by the Board of Directors in the Directors? Report

When any company is lent money by the shareholders, it ultimately shares its profits out of business. Such profit or share of profit is known as a Dividend, but it must be difficult to understand that a dividend is not a part of the rights of the shareholders, but when the company declares the dividends, the right to claim for dividends arise. Dividend decisions are an important decision, not only from the company point of view but from shareholder and government point of view. Every company consider these dictions as pivotal decisions as the whole company financial structure and planning revolve around it. Almost all the companies are paying the dividend to the stockholders regularly from their revenue profits. At the end, it can be said that the dividend amount has a major effect on the shareholders income, the company's profitability and government income.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.