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Study the following case/situation and express your opinion.The Board of Directors of STAR Co. Ltd. which is a listed company recommends a dividend of Rs. 15/- per share to be paid in cash.(a). Is it justified to pay the dividend firstly to its Preference Shareholders and then after to Equity Shareholders?(b). Is the AGM required to approve the same?(c). Can the company pay dividends in cash? |
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Answer» (a) Yes, because preference shares are entitled to the dividend before it is paid to the equity shareholder. Equity shareholders get dividends from residual profits i.e. after paying to preference shareholders. (b) Yes for declaration of final divided Approval of AGM is a must. (c) Yes, the company pay a dividend in cash and not in kind. |
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