Dividend and Interest — Secretarial Practice STD 12 Commerce / Arts — Question
Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsSecretarial PracticeDividend and Interest4 Marks
Question
Equity shareholders get the last priority in receiving dividends.
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Answer
The dividend is the portion of profits of the company paid to its shareholders.
The dividend is payable only to the registered shareholders of the company.
Preference shareholders are entitled to the dividend before it is paid to the equity shareholders.
The equity shares do not enjoy a preference for dividends.
They do not have priority for the payment of capital at the time of liquidation.
Equity shareholders will get dividends from residual profit i.e. after paying to preference shareholders and arrears of dividend on cumulative preference shares.
The equity shares get the last priority in dividends and thus are the residual claimants.
Thus, it is rightly said that the equity shareholders get the last priority in receiving dividends.
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