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Answer» Interim dividend and Final dividend. | Basis | Final Dividend | Interim Dividend | | (1) Meaning | Dividend which is declared at the Annual General Meeting of the company is called Final Dividend. | Dividend which is declared between two annual general meetings of the company is called Interim dividend. | | (2) Time when declared | Final dividend is declared after the conclusion of the financial year at Annual General Meeting. | Interim dividend is declared in between two consecutive Annual General Meeting. | | (3) Authority to declare | It is declared as per the recommendations made by the BOD and declared by the shareholder by passing an ordinary ‘Resolution’ at the Annual General Meeting. | Interim dividend is declared by the BOD by passing a ‘Resolution’, if Articles of Association so authorises. | | (4) Rate of Dividend | Ususally the rate of final dividend is higher than the rate of interim dividend. | The rate of Interim Dividend is comparatively lower than the rate of final dividend. | | (5) Legal Aspects | Since final dividend is declared only after ascertaining the profits on the basis of audited accounts. Hence there are no legal issues in distributing final dividends. Its always safe and legal. | If the Company is unable to earn expected profit in the second half of the financial year, after declaring interim dividend, the directors shall be held personally liable to reimburse such disbursed amount to the company. |
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