Companies, not having good cash position, generally pay dividend in theform of shares by capitalizing the profits of current year and of past years. Such shares are issuedinstead of paying dividend in cash and called 'Bonus Shares'. Basically there is no change in theequity of shareholders. Certain guidelines have been used by the company Law Board in respect of Bonus Shares.
(4) Scrip Dividend.
Scrip dividends are used when earnings justify a dividend, but the cashposition of the company is temporarily weak. So, shareholders are issued shares and debenturesof other companies. Such payment of dividend is called Scrip Dividend. Shareholders generally donot like such dividend because the shares or debentures, so paid are worthless for theshareholders as directors would use only such investment is which were not . Such dividend wasallowed before passing of the Companies (Amendment) Act 1960, but thereafter this unhealthypractice was stopped.
(5) Bond Dividends.
In rare instances, dividends are paid in the form of debentures or boundsor notes for a long-term period. The effect of such dividend is the same as that of paying dividendin scrips. The shareholders become the secured creditors is the bonds has a lien on assets.
(6) Property Dividend.
Sometimes, dividend is paid in the form of asset instead of payment of dividend in cash. The distribution of dividend is made whenever the asset is no longer required inthe business such as investment or stock of finished goods.But, it is, however, important to note that in India, distribution of dividend is permissible in theform of cash or bonus shares only. Distribution of dividend in any other form is not allowed.
Dividend which is given between two annual general meeting before declaring final result of company.
2. Proposed Dividend
Total amount of dividend which is offered to existing shareholders of company.
Final dividend is given after declaring the final result of company in the form of financial statements.Final and proposed dividend will same if interim dividend is given in trial balance and final dividend isgiven outside of trial balance.
4. Unclaimed Dividend
Unclaimed dividend is that dividend which declared by not claimed by a specific shareholder. Suppose,information of dividend was sent but letter was returned to company due to any reason.It will be shown in liability side till payment of dividend will not received by shareholder.