Question

Shall cumulative dividend be transferred along with preference shares

Answer 1

According to the Companies Act, 2013 along with the Companies Declaration and Payment of Dividend Rules, 2014 constitutes the legal framework for the declaration and distribution of dividends by a company. The term dividend includes both interim dividend and deemed dividend. As applicable to a company, which is a going concern, dividend means the profits allocated to the existing shareholders of the company. In case of a winding up, dividend means the division of realised assets among the creditors and contributors whereas Equity shares do not enjoy the same priority given to preference shares with respect to dividend. Equity shares are not entitled to a fixed rate of dividend, but are entitled to participate in the profits remaining after payment of dividend to preference shareholders.