Answer: (a) Yes (b) No (c) No
(a) Yes. The Board is recommending the dividend, so it is a final dividend to be declared at the AGM. Under Section 123 of the Companies Act, 2013, in a year of inadequate profit a company may declare a final dividend out of accumulated profits transferred to free reserves, subject to the Companies (Declaration and Payment of Dividend) Rules, 2014: the rate should not exceed the average rate of the three preceding years, the amount drawn should not exceed one-tenth of paid-up capital and free reserves, losses of the current year must first be set off, and the reserves remaining should not fall below 15% of paid-up share capital. (An interim dividend declared by the Board, by contrast, can be paid only out of the surplus in the profit and loss account and the profits of the current year, not out of free reserves.)
(b) No. The Board only recommends the final dividend. It is declared by the shareholders at the Annual General Meeting, who can approve it or reduce it but cannot increase it. (Only an interim dividend can be declared by the Board.)
(c) No. Dividend must be paid in cash, i.e. by cheque, dividend warrant or electronic transfer to the shareholder’s bank account. It cannot be given in kind or in the form of gifts (capitalising profits by issuing fully paid bonus shares is allowed).
