Dividends
Overview – Dividends
Dividends represent the portion of a company’s profits distributed to its shareholders as a reward for their investment. It is a key mechanism through which companies share earnings with equity holders, reflecting the company’s profitability and financial health.
Dividends can be declared as interim or final dividends, and paid in cash or kind (such as additional shares). The declaration and payment of dividends are governed by the Companies Act, 2013, along with regulations set by the Securities and Exchange Board of India (SEBI) for listed companies.
At Cardiff Services, we assist companies with the entire dividend management process—from declaration, computation, compliance, and filing of necessary forms to ensuring timely and accurate payments in line with statutory requirements.
Features – Dividends
Profit Distribution: Dividends are payments made to shareholders from company profits.
Interim & Final Dividends: Can be declared during the financial year (interim) or after the year-end (final).
Cash or Stock: Paid in cash or as additional shares (bonus shares).
Board and Shareholder Approval: Declaration requires approval from the board, and sometimes shareholders (especially for final dividends).
Subject to Profits: Dividends can only be declared out of profits or reserves as per Companies Act.
Regulated by Law: Governed by Companies Act, 2013 and SEBI (for listed companies) guidelines.
Tax Implications: Dividend income is subject to tax as per applicable laws; companies may have to deduct tax at source.
Pro-rata Basis: Dividends are paid in proportion to the number of shares held.
Non-Compulsory: Dividend payment is not mandatory; companies may choose to retain earnings for growth.
Reflects Financial Health: Regular dividends often indicate a company’s profitability and stability.
Decline or Suspension Possible: Companies may reduce or suspend dividends during financial distress.
Different Classes: Different classes of shares may receive different dividend rates (e.g., preference shares vs equity shares).
Documents Required – Dividend Declaration and Payment
Board Resolution approving the declaration of dividend (interim or final)
Shareholders’ Resolution (for final dividend, if required)
Financial Statements (Profit & Loss Account, Balance Sheet) showing available profits
Dividend Warrant or Payment Advice
Register of Members updated
Dividend Register (record of dividend payments)
Form MGT-7 (Annual Return) and Form AOC-4 (Financial Statements) filed with RoC
Form DPT-3 (if applicable for deposits related to dividend payments)
Tax Deduction at Source (TDS) certificate and challan (if TDS deducted on dividend)
Bank details of shareholders for dividend transfer
SEBI compliance documents (for listed companies)
Copy of Notice convening the General Meeting (if dividend declared at AGM)
Procedure – Dividend Declaration and Payment
Verify Profits and Availability of Funds
Ensure the company has sufficient profits or reserves as per Companies Act, 2013.
Board Meeting for Declaration
Convene a Board Meeting to propose and approve interim or final dividend.
Prepare minutes recording the decision and dividend amount.
Shareholders’ Approval (if required)
For final dividend, obtain shareholders’ approval at the Annual General Meeting (AGM) or Extra-Ordinary General Meeting (EGM).
Record Date and Dividend Amount
Fix the record date to determine shareholders eligible for dividend payment.
Issue Dividend Warrants / Payment Instructions
Prepare dividend warrants or electronic payment instructions.
Transfer dividend to shareholders’ bank accounts or dispatch dividend warrants.
Update Statutory Registers
Update the Register of Members and Dividend Register with payment details.
Tax Deduction at Source (TDS)
Deduct TDS on dividend payments as per Income Tax laws and issue TDS certificates to shareholders.
File Returns with RoC
File necessary forms like MGT-7 and AOC-4 reflecting dividend declaration and payment.
Maintain Records
Keep records of board and shareholders’ resolutions, payment proofs, and communication.
Compliance with SEBI (for Listed Companies)
Follow SEBI guidelines for dividend announcement, payment timelines, and disclosures.
Frequently Asked Questions
A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.
If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.
It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.
For a company name search in Cardiff, you may need:
Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
Jurisdiction (Cardiff / UK)
Owner or shareholder details (if applicable)
Business description
A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.
Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms