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A Company issues shares at the End of the year. Will newly issued share be entitled to get dividend for that year? According to me, such newly issued shares should not get dividend for that year as dividend is for the year for which there was no fund provided to the company throughout the year. Further, unless those shares have been issued with the entitlement of dividend for that year, they should not get such dividend? What’s your take on it?
Entitlement to dividend depends upon the Company dividend policy and share issue plans. Idealy the sharesre issued to new shareholders should not be entiltled for dividend but it depends upon the circumstances. For example if Investor has already provided loan to a company and the Company now issue shares agains the outstanding balance of the loan, then definetly the investor ll demand dividend as his funds have been invested in the Company.
New shareholders should ideally not be eligible for dividends when they receive their shares
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I liked, that, " Dividends on newly issued shares".
New shares are issued as per the resolution in the General Body Meeting.
Dividend is declared by the Board. In the Board resolution, Board will specify the eligibility of dividend payment like shareholders in the books as on a specific date. Dividend can be paid accordingly.
There is no universal prohibition.
Also, original subscriber may be one . he might have transferred the shares to someone else at the fag end of the year. Dividend will accrue to the person whose name is appearing as shareholder at the year end only.
