Dividends are a distribution of a company's profits to its shareholders. The concept originated in the 16th century when ship captains would sell financial claims in their voyages to investors. Under Indian law, the Companies Act of 2013 defines dividends and governs their declaration and payment for companies. It allows non-uniformly paid up shares to receive proportionate dividends. Companies with certain licenses cannot pay dividends and can only use profits for their objectives. Liquidation distributions are also not considered dividends. Listed companies must additionally follow securities regulations and disclosure requirements regarding dividends.

1. DIVIDEND DECISIONS

2. INTRODUCTION
• Dividends are distribution of part profit among the owners of business (equity
owners). Corporate dividends have long history and are intertwined with the
development of corporate form of business. Corporate dividends in Dividend
Decisions 228
• its rudimentary form can be traced back to early sixteenth century in Holland and
Great Britain, where the captains of sailing ships financed their voyages by selling
financial claims or “venture” in parts to common investors. The most common
denomination of parts was 1/32, of the ships property, but interests of 1/8, 1/16,
1/48, 1/56 were also common.

3. PROVISIONS RELATING TO DIVIDENDS
UNDER COMPANIES ACT
• According to the generally accepted definition term “dividend” means the profit of a
company which is not retained in the business and is distributed among the
shareholders in proportion to the amount paid-up on the shares held by them.
Section 51 of the Companies Act, 2013 permits companies to pay dividends
proportionately on pro-rata basis when all shares are not uniformly paid up. The term
dividend has been defined under section 2 (35) of companies Act 2013 and includes
interim dividend. Companies granted license under Section 8 of the act are prohibited
from paying any dividend to its members and can apply profits only in promoting the
objects of the company. In case of liquidation the distribution of any amount of profit
or property by liquidator is not considered as dividend.
• In India, the declaration and payment of dividends is primarily governed by the
companies Act, 2013 and in addition the provisions of the Securities Contracts
(Regulations) Act, 1953 and the SEBI (Listing Obligations and Disclosure Requirements)
Regulation, 2015 are applicable to listed companies. Specific provisions relating to
dividends in the income Tax Act, 1961 or under any other statute shall also be
applicable for the purpose of dividends.