Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus. #Stay_Home_Stay_Safe

Compliances at the time of dividend declaration

About of Service

  1. Legal and Regulatory Compliance Review:

    • Conducting a thorough review of all relevant laws, regulations, and company articles of association to ensure compliance with dividend declaration requirements.
    • Advising on procedural requirements for declaring dividends, including timing, frequency, and approval processes.

  2. Board and Shareholder Resolutions:

    • Assisting in drafting and preparing board resolutions authorizing the declaration and payment of dividends.
    • Facilitating the process of obtaining shareholder approval, if required, through a resolution at a general meeting.

  3. Financial and Tax Planning:

    • Reviewing the company's financial statements to assess the availability of distributable profits or reserves from which dividends can be paid.
    • Providing tax advisory services to optimize tax efficiency for both the company and shareholders, considering dividend distribution taxes and withholding tax implications.

  4. Documentation and Filings:

    • Preparing and maintaining necessary documentation related to dividend declaration, including board minutes, shareholder resolutions, dividend warrants, and any filings required with regulatory authorities.
    • Ensuring timely submission of relevant forms and reports to regulatory bodies, such as the Securities and Exchange Commission (SEC) or equivalent authority in the jurisdiction.

  5. Compliance Monitoring and Reporting:

    • Monitoring ongoing compliance with dividend distribution rules and regulations.
    • Providing periodic updates and reports to management and the board of directors on dividend compliance matters.

  6. Communication and Disclosure:

    • Assisting in preparing communication materials, such as dividend announcements, press releases, and disclosures to shareholders and the public.
    • Ensuring transparency and clarity in communications regarding dividend declaration, payment dates, amounts, and any conditions or qualifications.

  7. Resolution of Compliance Issues:

    • Addressing any compliance issues or queries from regulatory authorities related to dividend declaration promptly and effectively.
    • Providing guidance on corrective actions or adjustments needed to maintain compliance.

  8. Advisory and Consultation:

    • Providing ongoing advisory services on dividend policy, regulatory changes, and best practices for dividend declaration and distribution.
    • Offering customized solutions and recommendations tailored to the specific needs and circumstances of the company.

Uses and Benefits
  • Legal Compliance: Ensure adherence to laws and regulations governing dividend declaration.
  • Financial Review: Assess financial statements to determine available distributable profits or reserves.
  • Board and Shareholder Resolutions: Prepare and obtain approvals for board and shareholder resolutions.
  • Tax Compliance: Address tax implications and prepare required filings and certifications.
  • Documentation: Maintain records including board minutes, resolutions, financial statements, and tax documents.
  • Communication: Prepare clear and transparent communication materials for shareholders and the public.
  • Monitoring and Reporting: Implement systems to monitor compliance and report to regulatory authorities.
  • Risk Management: Identify and mitigate risks associated with dividend declaration, such as financial sustainability and regulatory changes.

Select your own Associate

Charges Structure & Our Scope of Work

Additional Disclosure

1. Dividend Declaration

  • Declaration Details: Information about the dividend declaration, including the amount of dividend per share, the total amount of dividend to be distributed, and the type of dividend (interim or final).
  • Declaration Date: The date on which the dividend is declared by the board of directors or shareholders.

2. Financial Statements

  • Recent Financial Statements: Latest financial statements of the company, including balance sheets and profit and loss accounts, which justify the dividend declaration.
  • Dividend Justification: Details of how the dividend declaration aligns with the company’s financial health and profitability.

3. Compliance with Legal Requirements

  • Statutory Compliance: Confirmation of compliance with legal requirements under relevant company laws (e.g., Companies Act) regarding dividend distribution.
  • Declaration of Solvency: Statement or certification by the board that the company is solvent and will remain solvent after the dividend payment.

4. Shareholder Approval

  • Board Resolution: Copy of the board resolution or minutes of the board meeting where the dividend was approved.
  • Shareholder Resolution: If applicable, details of any shareholder meetings where the dividend was approved, including resolutions passed and voting outcomes.

5. Dividend Payment Details

  • Payment Date: The date on which the dividend will be paid to shareholders.
  • Record Date: The record date for determining the eligibility of shareholders to receive the dividend.
  • Dividend Distribution: Method of distribution (e.g., bank transfer, dividend warrants) and any details relevant to the payment process.

6. Regulatory Filings

  • Filing with Authorities: Documentation of necessary filings with regulatory authorities, such as the Registrar of Companies (RoC) or Securities and Exchange Board of India (SEBI), as required for dividend declarations.
  • Stock Exchange Disclosures: If the company is listed, details of the disclosure made to stock exchanges regarding the dividend declaration.

7. Tax Compliance

  • Tax Deducted at Source (TDS): Information on tax deducted at source on the dividend, including rates and compliance with tax laws.
  • Dividend Distribution Tax (if applicable): Disclosure of any applicable dividend distribution tax and the treatment of such taxes.

8. Impact on Financials

  • Earnings Impact: Explanation of how the dividend declaration will impact the company’s earnings and reserves.
  • Retained Earnings: Details on how the dividend affects the company’s retained earnings and overall financial position.

9. Communication to Shareholders

  • Dividend Notice: Notice sent to shareholders regarding the dividend declaration, including payment date, record date, and method of payment.
  • Investor Communication: Any additional communication to investors or stakeholders explaining the dividend declaration and its implications.

10. Documentation and Records

  • Documentation: Maintenance of records and documentation related to the dividend declaration, including board resolutions, shareholder approvals, and proof of dividend payments.
  • Audit Trail: Ensuring an audit trail for the dividend declaration process to support future audits and regulatory reviews.

11. Contact Information

  • Point of Contact: Contact details for key company representatives or the investor relations team who can provide additional information or address queries related to the dividend declaration.

Terms & Conditions

Documents & Detail Required

  • Board Resolution: A resolution passed by the board of directors authorizing the declaration of dividends. This document should specify the amount of dividends, the payment date, and any conditions or restrictions associated with the dividend declaration.

  • Shareholder Resolution (if required): Depending on the jurisdiction and the company's articles of association, shareholder approval may be required for dividend declaration. A resolution passed at a general meeting of shareholders authorizing the dividend payment may be necessary.

  • Financial Statements: Updated financial statements, including the balance sheet, profit and loss statement, and statement of changes in equity. These statements are used to determine the availability of distributable profits or reserves from which dividends can be paid.

  • Dividend Distribution Policy: If applicable, a documented dividend distribution policy outlining the criteria and methodology for declaring dividends. This policy ensures consistency and transparency in dividend decisions.

  • Taxation and Compliance Reports: Documentation related to tax implications of dividend declaration, including withholding tax requirements and compliance with tax laws. This may include certificates or reports confirming tax compliance.

  • Legal Opinions and Certifications: Legal opinions from legal advisors certifying compliance with relevant laws, regulations, and the company's articles of association regarding dividend declaration.

  • Dividend Warrants or Bank Instructions: Instructions to the company's bank or registrar regarding dividend payments, including details such as shareholder names, dividend amounts, payment methods (e.g., electronic transfer, cheque), and payment dates.

  • Notification to Regulatory Authorities (if required): In some jurisdictions, companies are required to notify regulatory authorities, such as the Securities and Exchange Commission (SEC), of dividend declarations or distributions. This may involve submitting forms or reports as per regulatory requirements.

  • Communication Materials: Preparation of communication materials, such as dividend announcements, press releases, and disclosures to shareholders and the public. These materials should provide clear and accurate information about the dividend declaration, payment details, and any relevant disclosures.

  • Record Keeping: Maintaining proper records of all documents related to dividend declaration, including board minutes, shareholder resolutions, financial statements, tax filings, and communications with stakeholders.

    • Please Note Down Your Querie

    OUR REVIEW

    FAQ'S

    What is dividend declaration?

    Dividend declaration is the process by which a company's board of directors announces the distribution of profits to shareholders as dividends.

    What factors determine if dividends can be declared?

    Dividends can be declared based on the availability of distributable profits or reserves, as indicated in the company's financial statements.

    What are the legal requirements for dividend declaration?

    Companies must comply with legal provisions, including requirements on the amount of dividends, timing of declaration, and shareholder approval if specified in the company's articles of association or local regulations.

    Do dividends have tax implications?

    Yes, dividends are generally subject to taxation. Shareholders may be liable for taxes on dividend income, and companies must adhere to withholding tax requirements and other tax obligations.

    How are dividends communicated to shareholders?

    Dividends are communicated through dividend announcements, which detail the amount per share, payment date, and any conditions or qualifications. This information is often disclosed through press releases and filings with regulatory authorities.