The procedures for declaring and paying dividends are regulated by the legislation on joint stock companies. Stakeholders need to take into account the implementation of these procedures and existing legal restrictions.
The procedure for declaring and paying dividends, applied in all organizations, is regulated by Chapter 5 of the Federal Law “On Joint Stock Companies”. Dividends are paid for each placed share, while decisions on their announcement, payment can be made based on the results of the company's activities for the first quarter, six months, nine months, a full year. If, based on the results of these periods, a decision was made to declare dividends, they must be paid. Payments are usually made in cash. Dividends should be paid exclusively from the company's net profit, that is, from those funds that were received as a result of entrepreneurial activities and remained after taxes.
How is the decision to declare and pay dividends made?
The procedure for declaring and paying dividends is initiated by the general meeting of shareholders of the company. This body makes a decision, which indicates the amount of dividends declared and payable per share. In addition, the same document determines the form, procedure for payment of such income, the date of determining the composition of shareholders entitled to receive them. At the same time, the general meeting of shareholders when resolving some issues is connected with the recommendations of the executive body, which is the company's board of directors. In particular, the proposal of the board of directors determines the final date for which a list of dividend recipients is drawn up; the general meeting of shareholders, when determining the maximum amount of payments, cannot exceed the amounts recommended by the executive body for payment.
How are dividends paid to shareholders?
The legislation strictly defines the time frame during which the joint-stock company is obliged to pay dividends in accordance with the adopted decision. For different categories of shareholders, the payment period varies from ten to twenty-five days from the date of the decision on the list of persons entitled to receive payments. The actual distribution of funds is usually realized through wire transfers, although cash payments through postal orders are allowed. The company carries out activities for the transfer of dividends independently, and can also entrust the implementation of such procedures to the registrar who maintains the register of shareholders and has all the necessary data.
