State the features of Interim Dividend.

Answer: Interim dividend is a dividend declared by the Board of Directors between two Annual General Meetings, before the final accounts of the year are prepared. Its features are:

1. Declared by the Board: It is declared by the Board of Directors at a board meeting; approval of shareholders is not required.
2. Time: It is declared during the financial year, between two AGMs, before the final dividend.
3. Source: It is paid out of the surplus in the Profit and Loss Account and the profits of the financial year for which it is declared.
4. Restriction in case of loss: If the company has incurred a loss up to the end of the quarter preceding the declaration, the rate cannot exceed the average rate of the three preceding years.
5. Separate bank account: The amount must be deposited in a separate bank account within 5 days of declaration.
6. Payment within 30 days: It must be paid within 30 days of declaration.
7. Part of total dividend: It is part of the total dividend for the year; the AGM may confirm it as final dividend.
8. Debt once declared: Once declared it becomes a debt of the company and is paid in cash (or by cheque / electronic mode).