Format of Board Resolution for Recommendation of Dividend

Generally, a company prepares itself for payment of dividends to its shareholders only after the final accounts/ annual financial statements are finalised for a financial year and the amount of distributable profits are arrived at.

Final dividend: The final dividends are paid on the basis of the audited financial results of the whole of the financial year. On the recommendation of the Board of Directors of the company, the final dividend is declared at the annual general meeting (AGM).

Interim dividend: The Board of Directors may also declare a dividend at any time during a financial year, which is not final dividend and which is not recommended to the shareholders for declaration at the AGM. Though at the AGM, the shareholders may finally approve or take a note of such interim dividend.

Following template of board resolution can be helpful to you while drafting.


SAMPLE

#. To recommend declaration of dividend

“RESOLVED THAT in terms of the provisions under section 123 of the Companies Act, 2013 read with Companies (Declaration and Payment of Dividend) Rules, 2014, and subject to approval of the members at the ensuing annual general meeting, the Board do hereby recommend a dividend at the rate of ₹ .../- (Rupees ..................... only) per equity share of ₹ .../- (Rupees ........... only) each fully paid-up of the company.

RESOLVED FURTHER THAT the dividend be paid out of the profits of the company for the financial year 20XX-XX and that the record date for this purpose be fixed on (date) for payment of dividend to only the members whose names appear in the register of members as on the said date.

RESOLVED FURTHER THAT a separate bank account be opened in any of the scheduled banks for depositing the total amount of dividend within 5 days from the date of declaration of such dividend.

RESOLVED FURTHER THAT the Managing Director and the Company Secretary be and are hereby severally authorised to apply for opening of the said bank account, to operate the account without restriction to any limits, ensure remittance of dividends to all the eligible shareholders and to do all such acts, deeds and things as may be necessary to give effect to the foregoing resolutions.”



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NOTE: The resolution sample(s) here is only for 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.