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INTERIM
DIVIDEND
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FINAL
DIVIDEND
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Meaning
Interim dividend is the dividend which is declared
between two annual general meetings of a company.
When declared?
Interim dividend is declared when the company makes
good profit in the first half of the financial year. I.e. declared before the
end of the financial year.
Who declares?
Interim dividend is declared by the Board by passing
a resolution if they are authorised by articles.
Rate of Dividend
The rate of interim dividend is less than final dividend.
Legal Aspects
Declaration of interim dividend becomes risky and
illegal, if company incurs loss at the end of the year. .
Authorisation of Articles
Authorisation of Articles is necessary for
declaration of interim dividend.
Sources for declaration
An interim dividend is declared on the basis of the
better financial prospective results may it to be quarterly, half yearly etc.
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Final dividend is the dividend which is declared at
the annual general meeting of the company.
Final dividend is declared at the completion of
financial year in Annual General Meeting of the company.
Final dividend is recommended by the Board and
declared by the shareholders by passing ordinary resolution (decision) at
Annual General Meeting.
The rate of final dividend is generally more than interim dividend.
Declaration of final dividend is always legal, as it
is declared only after ascertaining (discover) the correct profit on the
basis of the audited accounts.
Authorisation (approval) of Articles is not
necessary for the declaration of final dividend.
There are number of sources available for declaring
the final dividend. It can be declared out of current profits or profits of
the previous years or out of reserves or out of capital profits out of the
financial assistance specifically provided by Government for dividend.
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INTERIM DIVIDEND FINAL DIVIDEND
