A dividend is the distribution of a reward from a portion of the company’s earnings and is paid to a class of its shareholders. Dividends are decided and managed by the company’s board of directors, though they must be approved by the shareholders through their voting rights.
Dividends can be issued as cash payments, shares, or other property, though cash dividends are the most common.
While the major portion of the profits of a company is kept within the company as retained earnings, which represent the money to be used for the company’s ongoing and future business activities, the remainder can be allocated to the shareholders as a dividend.
The board of directors can choose to issue dividends over various time frames and with different payout rates. Dividends can be paid at a scheduled frequency e.g. monthly, quarterly or annually.
Dividend payment procedures follow a chronological order of events and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. This chronological order consists of the following important dates;
Section 46 of the Companies Act No 71 of 2008 (“the Act”) sets out the requirements that a company must meet before making a distribution. A company must not make any proposed distribution to its shareholders unless the distribution;
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