Dividend Declaration Software for Company Secretaries: Section 123 Compliance

Section 123 of the Companies Act, 2013 governs declaration of dividend. Interim dividend is declared by the Board; final dividend requires ordinary resolution at AGM. Dividend declaration software helps Company Secretaries generate board resolutions, AGM notices, and payment-related documents compliant with the Act.

Companies Act 2013 Provisions – Section 123

Section 123 prescribes that dividend shall be declared only out of profits. Interim dividend may be declared by the Board. Final dividend is declared by members at the AGM by ordinary resolution. Transfer to reserves, record date, and payment timelines apply. The Board may declare interim dividend from surplus; final dividend is recommended by the Board and approved by members.

• Board resolution for interim dividend
• AGM ordinary resolution for final dividend
• Record date, payment date, book closure

Documents Required for Dividend Declaration

• Board meeting notice and resolution (interim)
• AGM notice and ordinary resolution (final)
• Attendance sheets and minutes

Manual vs Automated Dividend Document Drafting

Dividend documents require correct rate, record date, payment date, and total amount. Manual drafting risks calculation errors or inconsistent dates.

• Manual: 1–2 hours; rate and amount calculated manually
• Automated: 15–25 minutes; amounts auto-calculated from rate and shares
• Manual: Different templates for interim vs final
• Automated: Single form, document type selected automatically

Software Automation Process for Dividend Declaration

1. Select company – Company details load from database.
2. Select dividend type – Interim or final dividend.
3. Enter dividend details – Financial year, rate per share, record date, payment date, book closure dates.
4. Enter meeting details – Board meeting (interim) or AGM (final) date/time/venue.
5. Generate documents – Board notice, board resolution (interim) or AGM notice, ordinary resolution (final), attendance, minutes.

How Dividend Declaration Software Automates Drafting

Dividend declaration software generates board notices and resolutions for interim dividend, AGM notices and ordinary resolutions for final dividend, with correct rate, record date, and payment details. Use with board meeting software and AGM/EGM software. See the full event-based compliance guide.