DIVIDEND
Dividend
Lecture outline
1. Introduction
2. Types of dividend: interim and final dividend
3. Authority to approve dividend
4. The rules that courts have made in relations to payment of dividend
5. Dividend procedures : private and non-listed company
6. Dividend procedures : public listed company
7. E-dividend and procedure
8. Unclaimed dividend
Dividend
A dividend is a payment paid to a shareholder from the company
distributable net profits. It is normally in form of cash.
Types of dividend
Interim dividend
1
Final dividend
Dividend
3
Declaration of an interim
dividend does not create a
debt.
There is no distinction
between payable and paid.
Only on payment does the
shareholders acquire a right.
Dividend
Authority to approve the dividend:
1. The directors interim dividend
2. The shareholders final dividend
S365 of CA 1965 provide that dividend shall be paid out of the company
profits or pursuant to S60 (share premium). Profits shall be available at the
time of declaration. However there is no requirement that the profit must be
available at the time when it is to be paid.
Every director or manager of company who willfully pays or permits
payment of dividend out of what he knows is not profits:
a) shall be guilty of an offence against this Act;
b) shall also be liable to the creditors of the company for the amount of the
debts due by the company to them respectively to the extent by which
the dividends so paid have exceeded the profits and that amount may be
recovered by the creditors or liquidators suing on behalf of the creditors.
Dividend
Provision of CA 1965 and the companys AOA
1. S60 and S365
2. Table A, article 98 to Article 105.
The rules that the courts have made in relation to payment of dividend:
i.
A dividend cannot be paid if it would result in the companys asset
being insufficient to pay its debts
ii. A dividend cannot be paid out of borrowed money unless the
company has divisible profit available
iii. A dividend can be paid out of the revenue profits of the year
without first making good the losses of previous year.
iv. A loss of circulating capital /asset during the year must be made
good before revenue profit can be ascertained.
Dividend
v.
Dividend
ix)
x)
e-dividend
e-dividend is a service which allows an issuer to electronically
pay the shareholders cash dividend entitlements directly into
their bank account instead of making payment via bank
cheques.
One of the main objectives of implementing e-dividend is to
promote greater efficiency of the payment system which is
aligned to the national agenda of migrating to electronic
payment.
Registration for e-dividend
e-dividend procedure
eDividend_payment.pdf
Unclaimed dividend
The Unclaimed Moneys Act 1965 (UMA 1965) requires
companies holding dividends which have remained unpaid for
one year or more after they became payable to maintain a
record of all these unclaimed dividends in a Register of
Unclaimed Moneys (Form UMA-3) at its principal office or
place of business in Malaysia (sec 8 and sec 10(1) UMA 1965).
Annually, within the month of March (before Form UMA-3 and the
unclaimed moneys reported in the register are lodged with the Registrar of
Unclaimed Moneys), submit a copy of the Register (Form UMA-3) with
information of unclaimed dividends held up to the last day of December of
the previous year, for publication in the Gazette. All unclaimed dividends
which have remained unpaid up to the last day of December of the previous
year shall be entered into the register (sec 10A(1) UMA 1965).
Annually, not later than the last day of March, lodge a copy of Form UMA3 with the Registrar of Unclaimed Moneys together with all the unclaimed
dividends reported in the register which remained unpaid and 2 copies of
Form UMA-4 (a covering letter) signed by a director or the secretary or the
share registrar (sec 10(2) UMA 1965).
Failure to comply with the above requirements will render the company and
any officer of the company who is in default liable on conviction to a fine of
not exceeding RM20,000 and in the case of continuing offence, a further
fine of not exceeding RM1,000 for each day during which the offence
continues (sec 10(4) and 10A(2) UMA 1965.
Owners of the unclaimed dividends may recover them from the company at
any time before those moneys are paid to the Consolidated Trust Account (sec
10(5) UMA 1965).
The unclaimed dividends lodged with the Registrar of Unclaimed Moneys
shall be credited to the Consolidated Trust Account. The unclaimed dividends
will be kept in the Consolidated Trust Account for a period of 15 years from
the date the unclaimed dividends were credited to it (unless they have been
paid out following claims by owners) and thereafter transferred to the
Consolidated Revenue Account (sec 11(2) UMA 1965).
After the unclaimed dividends have been credited to the Consolidated Trust
Account, the owners of the unclaimed dividends may claim back the
dividends from the Registrar of Unclaimed Moneys by submitting Form
UMA-7. After the unclaimed dividends have been transferred to the
Consolidated Revenue Account, payments will be made only on the directive
of the Minister of Finance (sec13(1) UMA 1965).