The profit which is distributed among the shareholders or modarba certificate holders after paying the tax is called dividend.
Payment Included In Dividend :-
Following payments made by the company to its shareholders are treated as dividend.
- Payment Out Of Profit :-
Any payment made by a company out of accumulated profits to the shareholders.
- Current Year Profit :-
Distribution of cash out of current year profit to the shareholders.
- Payment Of Liquidation :-
The profits which are paid on the liquidation of a company to the shareholders and modarba certificate holders are also included in the dividend.
- Capital Reduction :-
Distribution of profit on the reduction of capital to the extent to which the company possessed the accumulated profit.
- Premium On Shares :-
Distribution of cash made by the company out of share premium to the shareholders is also included in dividend.
- Bonus Shares :-
If profit is distributed among the shareholders in the shape of bonus shares these are also included in dividend.
- Debentures :-
If profit is distributed among the shareholders and modarba certificate holders in the shape of debentures, these are also included in dividends.
- Deposit Certificate :-
Profit distributed among the shareholders in the way of deposit certificates is also included in dividend.
Not Included In Dividends :-
Following amounts are not included in the dividend :
- Loan : A loan which is advanced by the company to the shareholders.
- Full consideration : Distribution at the time of liquidation or reduction of capital in respect of any share for full consideration is not included in the dividend.