Question

Justify the following statement.

Payment of dividends can be done through various methods.

Answer 1

Dividends payable in cash may be paid by cheque or warrant or by electronic mode to the entitled shareholder.

Let’s discuss the different ways in which dividends can be paid by the company:

1. Dividend Warrant: It is a cheque sent by a company to a shareholder for payment of dividends to the registered address of the shareholder.
2. Dividend Mandate: A shareholder may wish to get a dividend credited directly to the bank account. Shareholder is required to send a request to the company in the prescribed form called ‘Dividend Mandate’. The dividend mandate authorizes the company to pay dividends directly to shareholder bankers.
3. Electronic Mode: A company can use electronic mode to pay dividends to its shareholders.
   (a) A listed company has to mandatorily use an RBI-approved electronic mode of payment such as ECS. (Electronic Clearing Services), NEFT (National Electronic Fund Transfer).
   (b) Make arrangements with banks and in collaboration with other banks, if required, to pay the Dividend Warrants at par.