6 Differences between Interim dividend and Final dividend

Important differences between Interim dividend and Final dividend

An interim dividend differs from a final dividend in the following respects:

1. The Board of Directors declares an interim dividend while the shareholders in the Annual General Meeting declare a final dividend.

2. An interim dividend is declared before the preparation of the final accounts. A final dividend, on the other hand, can be declared only after the accounts are prepared and the profit is ascertained.

3. Interim dividend relates to a part of the year (i.e.,) usually six months. A final dividend relates to the full year.

4. The Board can declare an interim dividend only when the Articles expressly permit a declaration. There need not be any express provision in the Articles for declaring a final dividend. It is an inherent right of the shareholders.

5. An interim dividend once declared shall not become a debt due from the company to the shareholders. While a final dividend, once declared, shall become a debt due from the company.

6. The directors are also empowered to cancel the declaration of the interim dividend after it is declared. The shareholders, once declared a final dividend, cannot cancel the declaration.

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