Distinguish between Interim Dividend and Final Dividend.

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Q.4 (3) Distinguish between Interim Dividend and Final Dividend.

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Answer: Distinction between Interim Dividend and Final Dividend PointInterim DividendFinal Dividend MeaningDividend declared by the Board between two Annual General Meetings, during the financial year.Dividend declared at the Annual General Meeting after the accounts of the year are finalised. Declared byBoard of Directors.Shareholders at the AGM, on the recommendation of the Board. AuthorityMust be authorised by the Articles of Association.No special authorisation in the Articles is needed. TimeDeclared during the financial year, before the accounts are finalised.Declared after the close of the financial year. BasisProfits of the current year so far, or surplus/free reserves.Profits of the whole financial year as shown by audited accounts. RevocationBeing in the nature of an advance, it can be revoked by the Board before it is paid.Once declared it becomes a debt and cannot be revoked. RateCannot exceed the average rate of the preceding three years if the company has incurred a loss in the current year up to the end of the quarter before declaration.The rate recommended by the Board; members can reduce but not increase it.

Distinguish between Interim Dividend and Final Dividend.

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Point	Interim Dividend	Final Dividend
Meaning	Dividend declared by the Board between two Annual General Meetings, during the financial year.	Dividend declared at the Annual General Meeting after the accounts of the year are finalised.
Declared by	Board of Directors.	Shareholders at the AGM, on the recommendation of the Board.
Authority	Must be authorised by the Articles of Association.	No special authorisation in the Articles is needed.
Time	Declared during the financial year, before the accounts are finalised.	Declared after the close of the financial year.
Basis	Profits of the current year so far, or surplus/free reserves.	Profits of the whole financial year as shown by audited accounts.
Revocation	Being in the nature of an advance, it can be revoked by the Board before it is paid.	Once declared it becomes a debt and cannot be revoked.
Rate	Cannot exceed the average rate of the preceding three years if the company has incurred a loss in the current year up to the end of the quarter before declaration.	The rate recommended by the Board; members can reduce but not increase it.