Article 114 of Table A provides inter alia “The company in general meeting may declare dividends…”. With reference to Table A and the common law state the rules that govern payment of dividend companies.

Dividend is said to be the return on a member‟s investment. Technically, it is the member‟s share of a company‟s profit.
 Payment of dividend companies is governed various rules:

Under Article 116 of Table A “No dividend shall be paid otherwise than out of profit.”
Under Article 114 of Table A directors recommend dividend and the same is declared members in general meeting. However members cannot declare dividend in excess of the amount recommended the board.
 Under Article 115 of Table A directors may from time to time pay to members such interim dividend as is justified the profits of the company.
Directors may before recommending dividend set aside out of the profits of the company such sums as they deem proper as reserve.
 Directors may deduct from any dividend payable to any member all sums of money payable him to the company on account of calls or otherwise.
Under Article 122 of Table A “No dividend shall bear interest against the company”.
 Dividend is generally payable within 42 days of declaration.
 Dividend may be paid in cash or cheque or warrant.
Companies are not legally obliged to make provision for depreciation before dividend is declared.
 Dividend cannot be paid if this would result in the company‟s inability to pay debts as they fall due.
 Losses of fixed assets need not be made good before treating a revenue profit as available for dividend.
 Losses of circulating assets in the current accounting period must be made good before dividend is paid.
A realised profit on the sale of fixed assets may be treated as a profit available for dividend.
Unrealised profit may be treated as profit available for distribution.
 Losses on circulating assets made in previous accounting periods need not be made good before dividend is paid.

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