The document discusses dividend policy and its various aspects. It defines dividend and explains the relevance and irrelevance concepts of dividend. It describes different approaches to dividend policy including the residual approach, MM model, Walter's approach and Gordon's approach. It also discusses determinants of dividend policy, types of dividend policies and forms of dividend including cash, stock and property dividends. The legal aspects of dividend payment are also summarized.
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Valuation of shares, nature of shares, factors affecting shares, need for valuation of shares, method of valuation of shares, net asset based method, yield based method, fair value method
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Valuation of shares, nature of shares, factors affecting shares, need for valuation of shares, method of valuation of shares, net asset based method, yield based method, fair value method
Let's today to know something about Dividend...... A dividend is an extra income to dividend holder which totally tax-free in hands of Receiver which is considered the source of income.
This ppt is all about the long term finance for the business. From which sources a business firm used to get their long term finance to run the business. So i hope it will help you to give your presentation . Thanks for the download. And if you find any mistake, please feel free to comment and inform.
or send me a mail in tatinpisa@outlook.com
Let's today to know something about Dividend...... A dividend is an extra income to dividend holder which totally tax-free in hands of Receiver which is considered the source of income.
This ppt is all about the long term finance for the business. From which sources a business firm used to get their long term finance to run the business. So i hope it will help you to give your presentation . Thanks for the download. And if you find any mistake, please feel free to comment and inform.
or send me a mail in tatinpisa@outlook.com
Dividend Policy resolves two questions:
Question 1: Does dividend policy affect firm value?
Question 2: If so, What is the optimal level of distribution ratio i.e., % Net Income to be distributed as dividend (Payout ratio). These issues are discussed under Irrelevance Theories (Modigliani and Miller’s Model) and
Relevance Theories (Walter’s Model , Gordon’s Model)
This ppt is prepared to make familiar with the dividend policy which includes Types of Dividend policy, Procedure for declaring dividend, Why do companies declare dividend
The dividend policies of an organization have a significant bearing on the market value of stocks. Companies must distribute dividends in line with the industry standards and previously distributed dividends by the company. The shareholders will otherwise perceive this variability negatively. It casts suspicion on the financial health and motives of the management (signaling effect). In aggregate, an inefficient dividend decision mechanism would adversely impact the valuation of the company.
Table of Contents
What are Dividend Decisions?
Impact of Dividend Decisions on Price
Factors affecting Dividend Decisions
Cash Requirement
Evaluation of Price Sensitivity
Stage of Growth
Good Dividend Policy
Importance of Dividend Decisions
Q. How much Dividend should a Company Distribute to its Shareholders?
Q. What will be the Impact of Dividend Decisions on the Share Prices of the Company?
Q. What is the Consequential Impact of Inability to Maintain Dividend Year after Year?
Types of Dividend Decision
Stable Dividends
Constant Dividends
Alternate Dividend Decisions
Factors affecting Dividend Decisions
Cash Requirement
The financial manager must take into account the capital fund requirements while framing a dividend policy. Generous distribution of dividends in capital-intensive periods may put the company in financial distress.
Evaluation of Price Sensitivity
Companies chosen by investors for their regularity of dividends must have a more stringent dividend policy than others. It becomes essential for such companies to take effective dividend decisions for maintaining stock prices.
Stage of Growth
Dividend decisions must be in line with the stage of the company- infancy, growth, maturity & decline. Each stage undergoes different conditions and therefore calls for different dividend decisions.
Good Dividend Policy
What Constitutes a Good Dividend Policy?
There does not exist a single dividend decision process that works for every organization. A decision suitable for one company may prove fatal for another company. For example, businesses with a consistent order book such as telecom and banking are expected to pay regular dividends. It may impact the stock prices if they do not pay dividends regularly. On the contrary, sectors of pharmaceutical and technology are highly research-oriented. These require huge cash expenses to further their operations. Therefore they cannot afford to pay a regular dividend. Investors of such stocks earn income mainly through capital appreciation. In essence, there are a lot of factors affecting dividend policy or decisions.
We can refer to the following renowned theories on Dividend Policy:
Modigliani- Miller Theory on Dividend Policy
Gordon’s Theory on Dividend Policy
Walter’s Theory on Dividend Policy
A good financial manager must, therefore, answer the following questions before taking crucial dividend decisions
Importance of Dividend Decisions
While deciding the distribution of dividends, management has to answe
Some of the major different theories of dividend in financial management are as follows: 1. Walter’s model 2. Gordon’s model 3. Modigliani and Miller’s hypothesis.
On the relationship between dividend and the value of the firm different theories have been advanced.
What Is a Dividend and How Do They Work?pickright46
Dividends are a fundamental aspect of investing that plays a crucial role in the financial landscape. This comprehensive guide aims to cover the concept of dividends, exploring how they work, their significance for investors, and factors influencing dividend payouts.
Dividends of a corporation are declared by itsSolutionDividend.pdfaksamobilecare
Dividends of a corporation are declared by its
Solution
Dividends of a corporation are declared by its Board of Directors
A divedend is a distribution of a portion of a company\'s earnings, decided by the board of
directors, to a class of its shareholders. Dividends can be issued as cash payments as shares of
stock or other property.
Breking Down Dividend
The Dividend rate may be quoted in terms of the dollar amount each share receives(Dividend Per
Share OR DPS) or It can also be quoted in terms of a percent of the current market price, which
is referred to as the Dividend yield.
A company\'s net profits can be allocated to Shareholders via a dividend or kept within the
company as retained earnings. A Company may also choose to use net profits to repurchase their
own shares in the open markets in a share buyback. Dividends and share buy-backs do not
change the fundamental value of a company\'s shares. Dividend payments must be approved by
the shareholders and may be structured as a one-time special dividend, or as an ongoing cash
flow to owners and investors.
Mutual Fund and ETF shareholders are often entitled to receive accrued dividends as well.
Mutual funds pay out interest and dividend income received from their portfolio holdings as
dividends to fund shareholders. In addition, realized capital gains from the portfolio\'s trading
activities are generally paid out(Capital gain Distribution) as a year end Dividend.
Company that Issue Dividends
Start-ups and other high-growth companies such as those in the technology or biotechnology
sectors rarely offer dividends because all of their profits are reinvested to help sustain higher-
than-average growth and expansion. Larger, established companies tend to issue regular
dividends as they seek to maximize shareholder wealth in ways aside from Supernormal Growth.
Companies in the following sectors and industries have among the highest historical dividend
yields basic materials, Oil & Gases, Bank & FInancial, Healthcare & Phramacetucals.
Arguments for Issuing Dividends
The Bird-in-hand arguments
for dividend policy claims that investors are less certain of receiving future growth and capital
gains from the reinvested retained earnings than they are of receiving current (and therefore
certain) dividend payments. The main argument is that investors place a higher value on a dollar
of current dividends that they are certain to receive than on a dollar of expected capital gains,
even if they are theoretically equivalent.
In many countries, the income from dividends is treated at a more favorable tax rate than
ordinary income. Investors seeking tax-advantaged cash flows may look to dividend-paying
stocks in order to take advantage of potentially favorable taxation. The clientele effect
suggests especially those investors and owners in high marginal tax brackets will choose
dividend-paying stocks.
If a company has a long history of past dividend payments, reducing or eliminating the dividend
amount may s.
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Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
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I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
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Message: @Pi_vendor_247 on telegram.
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If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
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Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
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1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
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Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
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Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
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2. INTRODUCTION
Dividend is the part of profit of a company
which is distributed by the company among its
shareholders.
It is the reward of the shareholders for
investment made by them in the share of the
wealth
Dividend policy of the firm, thus affect both the
long term financing and the wealth of
shareholder.
3. Dividend policy must be such a way that it
must reached in such a manner so as to
equitable apportion the distribution of profit
and retained earning
4. DIVIDEND DECISION AND
VALUATION OF FIRM
Value of the firm is maximum when the
shareholder wealth is maximum.
There is conflicting view regarding the impact
of dividend decision on valuation of firm.
We will discuss two group of dividend policy
1. The Irrelevance Concept Of Dividend
2. The Relevance Concept Of Dividend
5. THE IRRELEVANCE CONCEPT OF DIVIDEND
There are two approaches in Irrelevance
Concept Of Dividend
1. RESIDUAL APPROCH
2. MODIGLIANI AND MILLER APPROACH
(MM MODEL)
6. RESIDUAL APPROCH
Inn this approach, dividend decision have no
effect in wealth of the shareholder or the price
of shares.
In this theory dividend decision is merely a
part of financial decision. Because earning
available may be retained in the business for
re- investment if profitable investment is
available and if not available the it can be
distributed as dividend.
7. MODIGLIANI AND MILLER APPROACH
(MM MODEL)
In theory it says that dividend policy has no
effect on market price of the shares and value
of the firm is determined by the earning
capacity of the firm or its investment policy.
Splitting of earning between retention and
dividend may in manner firm likes.
8. ASSUMPTION
There is perfect capital market
Investor behaves rationally
Information about the company is available
to all without any cost
No investor can affect the market price of
the share
The firms rigid investment policy
There is no risk and uncertain
9. The Relevance Concept Of Dividend
There are two approaches in Relevance Concept
Of Dividend
A. WALTER’S APPROACH
B. GORDON’S APPROACH
10. WALTER’S APPROACH
In this approach it shows that dividend
decision are relevant and affect the value of
the firm.
In this approach it shows the dividend policy
has to factors which is affected by 2 element
.i.e. cost of capital (k) and rate of return (r).
11. According to Prof. Walter
I. It r> k, the firm earn higher rate of return on its
investment than the required rate of return. So
firm should retain earning . Such firm are termed
as growth firm.
II. It r< k, the firm earn lower rate of return on its
investment than the required rate of return. So
firm should distribute their earning as dividend.
III. It r= k, the firm earn equal rate of return on its
investment as expected. In such firm there is no
optimum dividend pay out and the value of the
firm would not change with the change in
dividend rate.
12. GORDON’S APPROACH
According to Gordon
I. It r> k, the firm earn higher rate of return on its
investment than the required rate of return. So firm
should retain earning . Such firm are termed as
growth firm.
II. It r< k, the firm earn lower rate of return on its
investment than the required rate of return. So firm
should distribute their earning as dividend.
III. It r= k, the firm earn equal rate of return on its
investment as expected. In such firm there is no
optimum dividend pay out and the value of the firm
would not change with the change in dividend rate.
13. DETERMINANTS OF DIVIDEND
POLICY
1. Legal restriction
2. Magnitude and trend of exchange
3. Desire and type of shareholder
4. Nature of industry
5. Age of the company
6. Future financial requirement
7. Control objective
8. Stability of dividends
9. Liquid resources
10. Inflation
14. TYPES OF DIVIDEND
POLICY
Regular dividend policy: Payment of
dividend at a usual rate is termed as regular
dividend. The investors such as retired persons,
widows and other economically weaker persons
prefer to get regular dividends.
15. Advantages of regular dividend
policy
It established the profitable record of the
company.
It creates the confidence amongst the
shareholders.
It aids in long-term financing and renders
financing easier.
It stablises the market value of shares.
16. Stable dividend policy: The term ‘stability
of dividend ‘ means consistency or lack of
variability in the stream of dividend
payments. It means payment of certain
minimum amount of dividend regularly. A
stable dividend policy may be established
in any of the following three forms:
Constant dividend per share.
constant pay out ratio.
Stable rupee dividend plus extra dividend.
17. Advantages of Stable dividend
policy
It is sign of continued normal operations of
the company.
It stablises the market value of shares.
It creates confidence among the investors.
It provides a source of livelihood to those
investors who view dividends as a source
of funds to meet day to day expenses.
It meets the requirements of institutional
investors who prefer companies with stable
dividends.
18. Dangers of stable dividend
policy
Once a stable dividend policy is followed
by a company, it is not easier to change it.
If the stable dividends are not paid to the
shareholders, the financial standing of the
company in the minds of investors is
damaged.
If the company pays stable dividends
inspite of incapacity, it will be suicidal in
the long run.
19. Irregular dividend policy:
Uncertainity of earnings.
Unsuccessful business operation.
Lack of adverse effects of regular dividend
on the financial standing of the company.
20. No dividend policy: A company may follow
a policy of paying no dividends presently
because of its unfavourable working capital
position or on account of requirements of
funds expansion and growth.
21. FORMS OF DIVIDEND
Dividends paid in the ordinary course of
business are known as profit dividends,
while dividends paid out of capital are
known as liquidation dividends. A
dividends which is declared between the
two annual general meeting is called
interim dividend. While the dividend which
is recommended to the shareholders at the
annual general meeting is known as final
dividend.
22. Cash dividend: Payment of dividend in
cash results in outflow of funds and
reduces the company’s net worth, though
the shareholders get an opportunity to
invest the cash in any manner they desire.
Scrip or Bond dividend: A scrip dividends
promises to pay the shareholders at a
future specific date. In case company does
not have sufficient funds to pay dividends
in cash, it may issue notes or bonds for
amounts due to the shareholders.
23. Property dividend: Property dividend are
paid in the form of some assets other than
cash. They are distributed under
exceptional circumstances and are not
popular in India.
Stock dividend: Stock dividend means the
issue of bonus shares to the existing
shareholders. If a company does not have
liquid resources it is better to declare stock
dividend.
24. BONUS ISSUE
A company can pay bonus to its
shareholders either in cash or in the form
of shares. Many a times, a company is not
in a position to pay bonus in cash inspite
of sufficient profits because of
unsatisfactory cash position. In such
cases, if the company so desires it can pay
bonus to its shareholders in the form of
shares by making partly paid shares as
fully paid .
25. EFFECTS OF BONUS ISSUE
It amounts to reduction in the amount of
accumulated profits and reserves.
There is a corresponding increase in the
paid up share capital of the company.
26. OBJECTS OF BONUS ISSUE
To bring the amount of issued and paid up
capital in line with the capital employed so
as to depict more realistic earning capacity
of the company.
To pay bonus to the shareholders of the
company without affecting its liquidity and
the earning capacity of the company.
To make the nominal value and the market
value of the shares of the company
comparable.
27. FOLLOWING CIRCUMSTANCES
WARRANT THE ISSUE OF
BONUS SHARES
When a company has accumulated huge
profits and reserves and it desires to
capitalise these profits so as use them on
permanent basis in the business.
When there is a large difference in the
nominal value and market value of the
shares of the company.
28. ADVANTAGES OF BONUS
SHARES
Tax Benefit – The receipt of bonus shares by the
shareholder is not taxable as income. The shareholder can
sell the new shares received by way of the bonus issue to
satisfy his desire for income and pay capital gain tax, which
are usually less than the income taxes on the cash
dividends.
Conservation of Cash – The declaration of a bonus issue
allows the company to declare a dividend without using
cash that may be needed to finance the profitable
investment opportunities within the company.
29. More Attractive Share Price – Sometimes the
intention of a company in issuing bonus
shares is to reduce the market price of the
share and make it more attractive to
investors. If the market price of a company
share is very high, it may not appeal to small
investors.
30. DISADVANTAGES OF BONUS
SHARES
The reserves of the company after the
bonus issue decline and leave lesser
security to investors.
The fall in the future rate of dividend results
in the fall of the market price of shares
considerably.
The issue of bonus shares leads to a drastic
fall in the future rate of dividend as it is only
the capital that increases and not actual
resources of the company.
31. Difference Between
Stock dividend means the issue
of bonus shares to the existing
shareholders of the company. It
amounts to capitalization of
earnings & distribution of profits
among the existing
shareholders without affecting
the cash position of the firm.
Stock split means reducing
the par value of shares by
increasing the number of
shares proportionately. For
e.g. a share of Rs.100 may
be split into 10 shares of Rs.
10 each.
Stock DIVIDEND STOCK SPLIT
32. The bonus issue and share split are similar
except for the difference in their accounting
treatment.
a. In case of bonus shares, the balance of the
reserves and surpluses account decreases due
to a transfer to the equity capital and the share
premium account. The par value per share
remain unchanged.
b. In case share split, the balance of equity
account does not change, but the par value per
share changes.
33. LEGAL ASPECTS OF PAYMENT
OF DIVIDEND
The term dividend refers to that part of profits of a
company which is distributed by the company among its
shareholders. Legal provisions relating to declaration of
dividend are laid down in sec.250, 205A, 206, 207.
i. Sources of declaring dividend
a. Out of current profits – Dividend can be declared by a
company out of profits for the current year arrived at
after providing depreciation.
34. i. Out of past profits – Dividend can be declared out of the
undistributed profits of the company for any previous
financial year in accordance with the provisions.
ii. Declaration of dividend out of profits
If a company wants to declare dividend out of the
accumulated profits:
a. The rate of dividend should not exceed the average of the
rates at which dividend was declared by it in five years,
immediately preceding that year or 10% of its paid up
capital, whichever is less.
b. The total amount to be drawn for the declaration of dividend
from the accumulated
35. Profits should not exceed an amount equal to one- tenth of
the sum of its paid up capital and the amount so drawn
should first be utilized to set-off the losses incurred in the
financial year.
c. The balance of the reserves after such drawl should
not fall below fifteen percent of its paid up capital.
iii. Other provisions are
a. Dividend on equity shares can be paid only after
declaration of dividend on preference shares.
b. No dividend can be paid on calls in advance.
c. When dividend is declared by a company, it must be
paid by the company within 30 days of declaration of
dividend.
36. d. According to sec.205 of the company
act, no dividend shall payable except in
cash provided that nothing in this section
prohibits the capitalization of profits or
reserves of a company for the purpose
of issuing fully paid up bonus shares.
e. In the absence of any specific provision
in the articles of association of the
company, dividend is paid on the paid up
capital of the company.