Difference Points Final Dividend Interim Dividend

Meaning The dividend which is declared in the The dividend which is declared between
Annual General Meeting of the company two Annual General Meetings is called as
is called as Final Dividend. Interim Dividend.
Who declares? Rate of final dividend is recommended by Rate of interim dividend is recommended
the Board of Directors and declared by and declared by the Board of Directors
shareholders in AGM by passing on only when Articles of Association allow
ordinary resolution. doing so.
When declared? Final Dividend is declared at Annual It is declared between two A.G.M, when
General Meeting of the company. company earns sufficient profits in first six
months.
Provisions in Articles No provision in Articles of Association is For declaration of interim dividend
of Association required for declaration final dividend. require provision in Articles of
Association.
Rate of Dividend Rate of final dividend is more than interim Rate of interim dividend less than final
dividend. dividend, as it is a part of final dividend.
Legal Aspect Final dividend is only declared after For declaring interim dividend finalization
finalization of final accounts and of annual accounts is not necessary. If
ascertaining correct profit so declaration company incurs loss at end of year,
of final dividend is legal. directors will be personally liable to make
good amount of disbursed interim
dividend.
Cancellation Final dividend is approved by Interim dividend is declared by Board of
shareholders so once it is declared it can’t Directors, it can be cancelled.
be cancelled.
Sources of Dividend It is declared from: It is declared only out of periodic profits,
i. Current Year’s Profit i.e. profit earned is substantial in 1st six
ii. Accumulated Profits and Free months and company is likely to keep the
Reserve same trend in future.
iii. Money Provided by Government
iv. Capital Profits
 Distinguished
Dividend Interest
Points
1. Meaning Dividend means the portion of the profits of Interest is the return on investment that a
the company which is allocated to the lender charges from his client on the money
holders of shares of the company. or loan that he has lend.

2. Rate of Return Dividend is paid at fixed rate to preference Interest is paid at fixed rate to the debenture
shareholders and at fluctuating rate to equity holders, depositors, bondholders and
shareholders. lenders.

3. Certainty of Dividend may or may not be paid regularly. It Interest is always paid either company’s earn
Return depends upon company’s profit and policy. profit or bear loss.
4. Priority in Dividend does not get priority in payment. It Interest enjoys highest priority in payment. It
Payment is paid after payment of interest and tax. is paid before tax and dividend.
5. Interim Board of Directors can declare interim There is no interim interest. It is paid as per
Payment dividend if authorized by Articles of the terms and conditions.
Associations.

6. Receiver The receiver of dividend known as The receiver of interest is known as creditors
shareholder (owners) of the company. of the company.
7. Expenses Dividend payment is not tax deductible Interest payment is tax deductible expenses.
expenses.
8. Effect on net Dividend is not an expense of the company Interest is an expense of a company and it
income and such they do not reduce the net income reduces the net income of the company.
of the company.

9. Payment of Dividend payment decision taken by Board of Interest payment decision taken by officers of
Decision directors and shareholders by passing the company, so not require pass any
resolution in the meeting. resolution in any meeting.
Difference Points Dematerialization
Meaning It is the process by which physical
certificate of an investor are converted to
an equivalent number of securities in
electronic form and electronic form and
credit into investors account with his/her
depository participant.
Account of the In the dematerialization the investor
Securities must open their Demat A/c with the
Depository Participant.
Conversion Process i. Open A/c in D.P.
ii. Surrender Physical Certificate of
Securities with D.R.F
iii. DRF forward to ROC & Depository
iv. Conversion by Company
v. Confirmation by Depository
vi. Confirmation by D.P.
Option The SEBI makes compulsory for the
investor who traded their securities in the
Stock Exchange.
Possession of Due to dematerialization securities hold
Securities in electronic format by the Demat
Account.
Stamp Duty on In dematerialization for transfer of
Transactions securities not require to stamp duty.
Duration of Due to dematerialization the securities
Transactions transfer within few seconds to another
person. It is a time saving.
Benefits In dematerialization investor get easily
benefits from the company. It not
requires collecting from company. The
benefits directly credited on Demat
Account such as dividend, interest, bonus
shares etc.
Security In dematerialization the securities are
secure because securities are protected
by Depository (NSDL and CDSL).
Fungible In dematerialization securities are
fungible. It means does not have
distinctive number (serial numbers).
Rematerialization
It is a process by which the electronic
form securities converted into physical
certificates.
In rematerialization the investor does not
require any account.
i. Request for Rematerialization to
D.P.
ii. Request forward to Depository
and ROC
iii. Conversion by Company and
Prepare Physical Certificate
iv. Confirmation by Depository
v. Confirmation by D.P.
vi. Investor gets Physical Certificate.
It is an optional for the investors.
Due to rematerialization the investor hold
securities in his own custody because
securities nature is physical.
In rematerialization for transfer of
securities require to pay stamp duty.
In rematerialization require proper
procedure for transfer of securities to
another person. This procedure takes
minimum 15 days. It is a time consuming.
In rematerialization the investor not get
easily benefits from the company. It
requires collecting from company or
Company sent on registered address of
the investor.
In rematerialization securities not secure
because physically hold by investors.
In rematerialization securities are not
fungible. It means have distinctive
number for securities (serial numbers).
Distinguished
Allotment Letter
Points
Meaning It is an intimation letter from the company
to the share applicant that certain no. of
shares applied for by him have been
allotted.
Occasion It is sent after the Board of Directors allots
shares to share applicant.
Preservation It needs to be preserved by the allottee as
it has to be exchanged against the share
certificate.
Enclosure With allotment letter enclosed allotment
receipt and slip.
Rights The allotment letter gives an applicant the
rights of membership.
Purpose Letter of allotment is sent to communicate
or inform the decision of approval of the
allotment of shares.
Contents The allotment letter contents are the
name of the share applicants, numbers of
shares applied for and the numbers of
shares actually allotted to him, allotment
money dues, allotment receipt, etc.
Regret Letter
It is an intimation letter from the company
to the share applicant informing him that
shares could not be allotted to him.
It is sent when the Board of Directors is
unable to allot shares to the share
applicant.
It needs not to be preserved as it has no
value for the receiver or not required in
the future.
With regret letter enclosed refund order.
The letter of regret does not give any
rights to the share applicant.
This letter is sent to communicate or
inform the refusal of share application.
The regret letter contents are name of
share applicant, no. of shares applied, the
fact that shares are not allotted, the
amount being refunded and particulars of
refund order.