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Shareholders Resolution for Declaration of Dividend at AGM

shareholders resolution for declaration of dividendDeclaration of dividend is one of the few items of ordinary businesses that are dealt at the Annual General Meeting (AGM) of the shareholders/members of a company under certain circumstances depending on the financial situation of that company.

Refer Chapter VIII of the Companies Act, 2013 from Sections 123 to 127 and the Companies (Declaration and Payment of Dividend) Rules, 2014 for provisions on 'Declaration and Payment of Dividend'.

Templates of shareholders resolution for declaration of dividend are given hereunder.—



SAMPLE #1

Declaration of dividend of INR .../- per share on ................... equity shares of INR .../- each for the financial year ended March 31, 20XX

“RESOLVED THAT a final dividend of Rs. .../- per share on ................ equity shares of INR .../- each aggregating to Rs. .............../- as recommended by the Board of Directors of the Company for the year ended March 31, 20XX be and is hereby declared and the same be paid between ..(Date).. and ..(Date).., to the eligible members of the Company.”


SAMPLE #2

To consider and if thought fit, to pass with or without modifications, the following resolution as an Ordinary Resolution:

“RESOLVED THAT a final dividend of INR ....../- per share (...% on the face value of INR ....../-) and an additional special dividend of INR ....../- per share (...% on the face value of INR ....../-) as recommended by the Directors, be and is hereby declared for the financial year ended 31st March 20XX on the paid-up capital of INR .......... /- and the same be paid to shareholders, whose names stand on the Register of Members of the Company on (Date), making with the interim dividend of INR ....../- per share (...% on the face value of INR ....../-), a total dividend of INR ....../- per share (....% on the face value of INR ....../-) for the year 20XX-XX and that the total dividend amount of INR ....../- representing the said total dividend of INR ....../- per share (....% on the face value of INR ....../-) be paid out of the profits for the year 20XX-XX.


SAMPLE #3

To declare a dividend on equity shares for the financial year ended March 31, 20XX and in this regard, pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT a dividend at the rate of ₹ .../- (Rupees ..................... only) per equity share of ₹ .../- (Rupees ........... only) each fully paid-up of the Company be and is hereby declared for the financial year ended March 31, 20XX and the same be paid as recommended by the Board of Directors of the Company, out of the profits of the Company for the financial year ended March 31, 20XX.”

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Notice

Notes :

(a) The Company has fixed ..(Date).. as the “Record Date” for determining entitlement of members to dividend for the financial year ended March 31, 20XX.

(b) The dividend on equity shares, if declared at the Meeting as recommended by the Board of Directors, will be credited / despatched between ..(Date).. and ..(Date).. to those members whose names appear on the Company’s Register of Members on the Record Date; in respect of the shares held in dematerialised mode, the dividend will be paid to members whose names are furnished by National Securities Depository Limited [NSDL] and Central Depository Services (India) Limited [CDSL] as beneficial owners as on that date.


SAMPLE #4

#. To declare Dividend of INR ... per equity share of face value of INR .... each.

To consider and, if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT in pursuance with the recommendations of the Board of Directors and applicable provisions of the Companies Act 2013, final dividend at INR ... per equity share of face value of INR .... each, on the paid-up equity share capital of the Company, for the financial year ended 31st March, 20XX, be and is hereby declared and approved for payment.

RESOLVED FURTHER THAT the dividend be paid to the members of the Company whose names appear in the Register of Members for physical shares and in the list of beneficiary position as on record date for demat shares furnished by the Depositories and who are entitled to such dividend, through electronic credit to bank accounts and other appropriate mode including through dividend warrants or demand drafts.”

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(Following imp. notes with regard to the dividend declaration are to be mentioned along with other notes in the Notice of AGM.) (Modify it suitably, as necessary in your case.)

NOTES:

#_. Record Date for the purpose of dividend shall be (Date) for determining entitlement of members to dividend for the financial year ended 31st March, 20XX. The dividend on equity shares, if declared at the Meeting as recommended by the Board of Directors, will be credited / dispatched within statutory timeline, to those members whose names appear on the Company’s Register of Members on the Record Date; in respect of the shares held in dematerialised mode, the dividend will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners or members as on that date.

#_. The dividend, if approved, will be paid by crediting in to the bank account, as provided by NSDL and CDSL through ECS or NECS or electronic transfer, of those shareholders holding shares in electronic form/demat. In respect to shareholders holding shares in physical form or in case of ECS, NECS, or electronic payment rejected, dividend will be paid by dividend warrant or demand draft.

#. Direct credit of dividend / ECS: Under this system the shareholders get the credit of dividend directly in their designated bank account. This ensures direct and immediate credit with no chance of loss of dividend instrument in transit. To avail this facility, the members are requested to update with their DP, the active bank account details including 9 digit MICR code and IFSC code, in case the holding is in dematerialized mode. In case of shares held in physical mode, the said details may be communicated to the Company or Share Transfer Agent, by quoting folio number and attaching a photocopy of the cheque leaf of the active bank account along with a self-attested copy of the PAN card.



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Relevant Resolution:

Board Resolution for Recommendation of Dividend - format available here


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NOTE: These resolution samples here are only for your reference to help you with drafting. Do refer the exact provisions of the Act, relevant rules framed thereunder and any other applicable laws to be able to not to miss out anything important while drafting.

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