Dividend and Interest — Secretarial Practice STD 12 Commerce / Arts — Question

• The interim dividend is the dividend that is declared and paid in the middle of an accounting year i.e. before the finalization of accounts for the year. Dividend declared by the Board of Directors between two Annual General Meetings is called Interim Dividend.
• The interim dividend is paid in the middle of the accounting year.
• The interim dividend is declared by the Board of directors during any financial year out of surplus in the profit and loss account and out of profits of the financial year.

Features of Interim Dividend:

• The Board of Directors has the power to declare an interim dividend.
• Interim Dividend is only payment on account of the whole dividend for the year.
• The company should provide depreciation for the entire year and not for a part of the year before declaring an interim dividend.
• Interim dividends cannot be paid out of any reserves.
• The Board of directors can declare interim dividend only when it is mentioned in the Articles of Association of the Company.
• A resolution has to be passed in the Board Meeting for declaring the Interim Dividend.
• A separate Bank account should be maintained in a scheduled bank to credit the interim dividend within 5 (five) days of its declaration.
• Interim Dividend should be paid within 30 days of its declaration.
• Unpaid/Unclaimed dividend should be transferred to ‘Unpaid Dividend Account’ within 7 days of the expiry of 30 days of declaration i.e. 37 days of its declaration.
• Any amount remaining Unpaid/Unclaimed in the ‘Unpaid Dividend Account’ for 7 (seven) years should be transferred to IEPF.