07-24-2009, 07:33 PM
Faisal,
In case 2, we have number of examples where dividend is paid from current year's profit although there were accunulated opening losses.
In some cases SECP instructed to take care of at least minority shareholders for paying dividend. We have examples where majority shareholders waived their right to dividend and only minority was paid.
In the query raised by Bilal 10 percent dividend will be equal to the current year's profit which can be paid as per available precedents. This will not be considered payment out of capital or reduction of share capital.
If this query was raised in practical perspective, I suggest Bilal to write to SECP for clarification for having a legal cover. They may suggest to reduce the dividend rate a little bit so that eroded equity may be repaired to some extent even after paying for the dividend!
Regards,
Kamran.
In case 2, we have number of examples where dividend is paid from current year's profit although there were accunulated opening losses.
In some cases SECP instructed to take care of at least minority shareholders for paying dividend. We have examples where majority shareholders waived their right to dividend and only minority was paid.
In the query raised by Bilal 10 percent dividend will be equal to the current year's profit which can be paid as per available precedents. This will not be considered payment out of capital or reduction of share capital.
If this query was raised in practical perspective, I suggest Bilal to write to SECP for clarification for having a legal cover. They may suggest to reduce the dividend rate a little bit so that eroded equity may be repaired to some extent even after paying for the dividend!
Regards,
Kamran.
