What is the Difference Between Interim Dividend and Final Dividend?
🆚 Go to Comparative Table 🆚The main differences between interim dividend and final dividend are related to their timing, declaration, and cancellation rules. Here are the key differences:
- Timing: Interim dividends are paid before the end of the company's financial year, while final dividends are paid after the end of the financial year.
- Declaration: Interim dividends are usually declared by the board of directors, whereas final dividends are declared by the shareholders at the annual general meeting (AGM).
- Cancellation: Interim dividends can be canceled if all shareholders consent to the cancellation of the dividend allocation. However, final dividends cannot be canceled once they are declared and must be issued.
- Rules and Obligations: Interim dividends are subject to the company's article of association, while final dividends are subject to the shareholders' approval at the AGM.
- Amount: Interim dividends are typically smaller in amount than final dividends, as they represent a portion of the annual profits.
- Cash Flow Impact: Both interim and final dividends can affect the company's cash flow positively or negatively, depending on the company's financial situation.
In summary, interim dividends are declared and paid before the end of the financial year, while final dividends are declared and paid after the end of the financial year. Interim dividends are subject to the board of directors' approval, while final dividends require shareholders' approval at the AGM.
Comparative Table: Interim Dividend vs Final Dividend
Here is a table comparing the differences between interim dividend and final dividend:
| Feature | Interim Dividend | Final Dividend |
|---|---|---|
| Timing of payment | Paid before the end of the financial year | Paid after the end of the financial year |
| Approval process | Approved by the Board of Directors | Approved by the shareholders at the AGM |
| Purpose | To distribute profits earned before year-end | To distribute the remaining profits after accounting for all expenses and reserves |
| Amount | Typically smaller, as it is only a portion of the annual profits | Typically larger, as it is the remainder of the annual profits after interim dividends have been paid |
| Impact on cash flow | Can affect the company's cash flow positively or negatively | Can affect the company's cash flow positively or negatively |
Interim dividends are usually smaller in amount than final dividends and are paid before the company's financial year-end. They are approved by the Board of Directors and are a way for companies to distribute some of their profits to shareholders before the full financial year. On the other hand, final dividends are paid after the end of the financial year and are approved by the shareholders at the Annual General Meeting (AGM). They represent the distribution of a company's profits to its shareholders, usually at the end of the financial year.
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