A joint-stock company is characterized by the fact that the authorized capital is divided into shares, which give the right to participate in the management of the company and the right to receive dividends on shares, that is, part of the company's profits. Federal Law No. 208-FZ of December 26, 1995 (hereinafter referred to as Law No. 208-FZ) establishes the procedure for paying dividends, the basis for which is the decision of shareholders.
What are dividends
Dividends are passive income, Part net profit company, which accounts for one share. feature joint-stock company is the formation authorized capital divided into a certain number of shares. The rights on shares depend on their type - ordinary and preferred. The fundamental difference is that the owners preferred shares the right to receive dividends in a certain amount may be guaranteed, but they will not be entitled to participate in the management of the company.
An investor makes a decision to invest in shares based on a number of considerations, and if the purpose of acquiring shares is to generate income, then it is necessary to proceed from the dividend policy of the company. Many large companies, whose shares are listed on the stock exchange, announce plans for payments to shareholders. For example, Yandex announced in advance that it does not plan to pay dividends.
This does not mean that it is not advisable to invest in such shares, as the price of a share changes all the time and the difference between buying and selling can provide income. However, such a difference between the purchase and sale prices is not a dividend, which has a completely clear regulation, declaration procedure, size, payment terms.
Dividend decision
The first and main condition for the payment of dividends is the successful operation of the company, making a profit at the end of the period. If the company has received a loss, then the decision on dividends cannot be made.
Distributed net profit, determined according to the reporting data. The resulting profit is directed to development and to the payment of income to shareholders. How exactly the net profit is distributed and whether it is distributed at all, is decided by the general meeting of shareholders at the annual or extraordinary general meeting.
But before that, the board of directors makes recommendations on payments, and the general meeting of shareholders is not entitled to exceed the recommended amount of dividends (clause 4, article 42 of Law No. 208-FZ). If the board of directors recommends not to pay dividends, then the general meeting of shareholders cannot independently decide on the payment.
It is important that if the decision on the payment of dividends has not been made, then the shareholders are not entitled to demand the payment of dividends. This applies not only to those situations where the decision expressly states the non-payment of dividends, but also in a situation where the decision of the general meeting does not indicate the payment of dividends or the amount, term and procedure for payment are not determined.
Dividend payment procedure
If a decision is made to pay dividends, then in accordance with paragraph 3 of Art. 42 of Law No. 208-FZ, you must specify:
- on what date the persons entitled to dividends will be determined;
- the amount of dividends for each type of shares;
- form of payment of dividends;
- dividend payment period;
- procedure for paying dividends.
The law establishes a range of dates when those who are entitled to receive dividends should be determined, namely not earlier than 10 and not later than 20 days from the date of the decision of the general meeting on payment (clause 5 of article 42 of Law No. 208-FZ).
Dividends must be determined for each type of share. For preference shares, dividends in the charter can be specified both in a fixed amount and in percentage to profit or face value.
Dividends may be paid in cash or in kind, such as shares in subsidiaries or treasury shares.
If payments are in cash, then in paragraph 8 of Art. 42 of Law No. 208-FZ indicates only about non-cash form dividend payments. Individuals need to transfer cash by postal order or transfer to a bank account, legal - transfer to a current account. That is, it is impossible to pay dividends to shareholders from the cash desk.
When dividends cannot be paid on shares
Society in any situation and under any financial result has the right to decide on non-payment of dividends, but there is statutory restrictions when the company is obliged to make a decision on non-payment of dividends. This happens in the following cases:
- incomplete payment of the authorized capital of JSC;
- repurchase of shares is not complete;
- if the company is threatened with bankruptcy after the payment of dividends;
- insufficiency net assets society.
In addition, the company does not decide on the payment of dividends if this may lead to a decrease in financial performance.
1. A dividend is a part of the net profit of a joint-stock company, subject to distribution among shareholders, attributable to one ordinary or preference share.
Net profit directed to the payment of dividends is distributed among the shareholders in proportion to the number and type of shares they own.
2. The dividend can be paid quarterly, every six months or once a year.
An interim dividend is declared by the Board of Directors of the company per one ordinary share based on the results of the past quarter (half year).
The amount of the final dividend per one ordinary share is declared by the general meeting of shareholders based on the results of the year, taking into account the payment of interim dividends at the suggestion of the Board of Directors of the company.
The amount of the final dividend cannot be more than recommended by the Board of Directors, but can be reduced by the general meeting of shareholders.
3. A fixed dividend (or its minimum amount) on preferred shares is established by the company upon their issue.
When paying dividends, dividends on preferred shares are paid first, then dividends on ordinary shares.
If there is sufficient profit to pay fixed dividends on preferred shares, the company is not entitled to refuse to pay dividends to the holders of these shares. In case of refusal of the company, shareholders may demand payment of dividends through the court.
The payment of dividends on preferred shares by the company in the event of insufficient profit or loss of the company is possible only at the expense and within the limits of the special funds of the company created for this purpose. Spending reserve fund society for these purposes is not allowed.
4. The payment of dividends on ordinary shares is not a specific obligation of the company to shareholders. The General Meeting of Shareholders and the Board of Directors of the company have the right to decide on the inappropriateness of paying dividends on ordinary shares based on the results of a particular period and year as a whole.
5. Payment of dividends declared by the general meeting is mandatory for the company.
Shareholders have the right to demand payment of declared dividends from the company through the court. In case of refusal, the company must be declared insolvent and subject to liquidation in accordance with the procedure established by law.
6. In case of payment of excessive dividends to shareholders, the company may set off overpayment on account of future payments or invite shareholders to return it on the basis of a decision of the general meeting.
At the same time, the company is not entitled to force shareholders to return the overpayment of dividends.
7. The Board of Directors and the General Meeting of Shareholders are prohibited from declaring and paying dividends if the company is insolvent or may become so after paying dividends.
8. If there are losses in the annual balance sheet of the company, then the Board of Directors or the general meeting of shareholders is not entitled to declare and pay dividends on shares until the losses are covered or the authorized capital (fund) of the company is reduced.
9. Dividends are not paid on shares that have not been issued into circulation or are on the company's balance sheet.
10. In case of payment of shares not in full, dividends are paid to the shareholder in proportion to the paid part of the cost of shares, unless otherwise specified by the charter of the company.
11. Shares acquired not later than 30 days before the officially announced date of its payment are entitled to the dividend.
12. By decision of the Board of Directors or the general meeting of shareholders, a dividend may be paid in shares (profit capitalization), bonds and commodities.
13. Dividends are taxed regardless of the form of their payment in accordance with the current tax legislation. In the case of payment of dividends in goods, the amount of the dividend calculated for tax purposes is determined based on the actual purchase prices of the goods.
14. The company announces the amount of the dividend, excluding taxes on them.
15. An open joint stock company publishes data on the amount of dividends paid out in the mass media.
16. The dividend is paid by the company or the agent bank by check, money order, postal or telegraphic transfer.
17. If, on behalf of the client, the management of shares is carried out by an investment firm, then dividends are paid to the shareholder minus remuneration investment firm, the amount of which is determined in the contract with the client.
The authorized capital of a joint-stock company is a set of shares distributed among its owners. The income of a joint-stock company is received by its owners in the form of dividends on the shares they own. How are dividends paid on shares? This procedure has its own nuances.
Dividends on shares in legislation
First, let's figure out what exactly is meant by dividends.
From point of view tax code, namely Article 43 dividends are any income received by a shareholder or member of the company in the distribution of profits remaining after tax. Dividends are paid in proportion to the shares of owners in the authorized capital of the organization. Thus, the concept of dividends in the Tax Code is somewhat broader, it applies both to joint-stock companies, whose management company is divided into shares, and to companies with limited liability whose authorized capital consists of shares or contributions of the founders. There is no concept of dividends in the LLC Law, and the process of profit distribution itself is not described by additional terms. The JSC Law, on the contrary, fixes the receipt of dividends on shares for the payment of income specifically for a joint-stock company (Article 42 federal law dated December 26, 1995 No. 208-FZ).
Which stocks pay dividends
Shares of a joint-stock company, the entire total nominal value of which forms the authorized capital, may be ordinary or preferred. Moreover, ordinary shares always have the same par value. A company may have several types of preferred shares, but in each such group, preferred shares also have the same value and give their owners an identical amount of rights.
The difference between the two types of these securities is that the payment of dividends on preferred shares is always fixed - it is prescribed in the company's charter. In the second case, everything will depend on the profit of the organization and on the decision regarding the use of this profit for the payment of dividends.
When does a share dividend pay out?
A joint stock company may pay dividends based on the results of the 1st quarter, half a year, 9 months and a year. The joint-stock company makes a decision on the payment of income on shares within 3 months from the date of the end of the relevant period.
Dividends per ordinary shares is a payment from the company's net profit after tax, determined on the basis of data financial statements. If the company, for some reason, ended the year with a loss, its shareholders will not receive anything. But this does not apply to all owners of the company. The company is obliged to pay dividends on preferred shares, if not from net profit, then from reserves specially formed for these tasks.
What determines the size of the dividend on ordinary shares
Not all profits are necessarily directed to the payment of dividends. A certain part of it can be used for business development.
The decision on what part of the profit will be spent on the payment of dividends is made by the general meeting of shareholders. How the amount of dividends on ordinary shares is calculated is influenced by the recommendation of the board of directors of the JSC. Council establishes maximum amount share dividends. The final decision of the shareholders must be within this amount. Moreover, the board of directors may, in principle, not recommend paying dividends based on the results of a particular year. Other shareholders will also not be able to violate this recommendation.
At the general meeting of shareholders, in addition to the very fact of paying dividends, as well as their amount, it must be approved on what date the persons claiming income will be determined, as well as the term and form of dividend payment. The register of shareholders receiving income is determined within the period from the 10th to the 20th day from the date of the decision of the general meeting on the payment of dividends. After closing the register, the company is given 25 days in normal cases, or 10 days, if it is a nominal holder or a trustee-professional participant in the securities market, in order to settle accounts with all shareholders. The specific date of payment of dividends is also determined by the meeting of shareholders.
The law establishes the requirement for non-cash settlements with shareholders. Thus, in order to resolve the issue of how to receive dividends on shares, it is better for individuals to acquire bank account, the details of which must be known to the issuing company. An alternative option is a postal order. For legal entities, dividends are transferred to the current account. Cash payment of dividends is prohibited.
Taxation when calculating dividends on shares
A company that pays dividends to its shareholders is recognized as tax agent By this species income. In calculations with individuals she will have to withhold and transfer to personal income tax budget, and from the income of shareholders-legal entities - income tax (paragraphs 3, 4 of article 214, paragraphs 3, 7 of article 275, paragraph 3 of article 284 of the Tax Code of the Russian Federation). IN common cases the rate of both taxes on dividends is the same - 13%. But in some situations, a different rate applies. So, if a Russian company pays dividends to a foreign individual who is not a resident of the Russian Federation, personal income tax is withheld from him at a rate of 15%. If the recipient of dividends is a foreign company, then its income is subject to the same 15%, but already income tax. International agreements regulating, among other things, the issues of paying dividends between Russian and foreign companies may be subject to a different tax rate. In this case, it is she who has priority, and the 15% provided for by the Tax Code do not apply.
The growth of inflation, which the Central Bank cannot yet stop, a string of revocations of licenses from commercial banks, the instability of precious metals quotes are forcing Russians to look for alternative methods of investment. People with sufficient levels financial literacy and familiar with at least basic financial instruments are increasingly choosing to purchase dividend shares. We will briefly talk about what dividends are and how dividends are paid on shares in Russian companies.
What are share dividends
The definition of the concept of "dividends" is given in Art. 43 of the Tax Code of the Russian Federation. Dividends mean any income received by a shareholder (investor) from a company in the distribution of profit remaining after tax (including interest on preferred shares) on shares owned by the shareholder, in proportion to the shares of shareholders in the authorized capital of this company.
Preferred shares differ from ordinary shares in that they pay a conditionally fixed dividend, the amount of which is specified in the company's charter (for example, it can be 10% of profit or 5% of the nominal value of shares). Preferred shares do not carry voting rights in the election of directors and boards of directors. The law states that dividends on preferred shares cannot be less than dividends on ordinary shares. The amount of income payable on preferred shares is deducted from total amount dividends. To find out how much an investor will receive one by one ordinary share, it is necessary to divide the resulting difference by the number of ordinary shares.
How dividends are paid in Russian companies
To receive stock dividends Russian companies, you need to be well versed in the following dates:
- The ex-dividend date is the date on which the company's shares must be held in order to receive dividends. Since 2014, this "cut-off" date cannot be set before the decision to pay dividends was made, that is, before the annual general meeting of shareholders. Remember that according to the T+2 trading regime that has been in effect in Russia since September 2013, there is a deadline by which you need to buy shares in order to get into the register for dividends - no later than 2 days before the closing date of the register.
- The date of the decision to pay dividends is approved by the annual general meeting of shareholders on the basis of proposals from the board of directors.
- Date of the annual general meeting of shareholders - comes after the date of closing the register for participation in the annual meeting (set by the board of directors), but before the closing of the register for dividends.
- The date of closing the register for dividends is the final date of compiling the register of persons who are entitled to receive dividends. Since 2014, it has been approved by the meeting of shareholders based on the recommendations of the board of directors and must occur no later than 20 days and no earlier than 10 days after the meeting of shareholders. Important: Dividends will be paid only to those people who were entered into the register 2 days before the date of its closing. You don't have to hold shares for a full year, though: you can buy a company's securities up to a month before the closing date of the register and still receive dividends.
- Date of payment of dividends - the date when the shareholder receives the dividends due to him (usually dividends are paid once a year). From 01.01.2014, the dividend payment period is set at 25 days from the ex-dividend date.
It should be noted that back in 2013, the process of determining some dates was significantly different from the one that is in force now. Ilya Balakirev, an analyst at UFS IC, emphasizes that now, at the time of the "cut-off" for dividends, the investor will know exactly the approved amount of dividends. Consequently, the risks of dividend strategies will be significantly reduced. The market will also be positively affected by the reduction of dividend payment terms (previously 60 days were allotted for this).
Also, the changes that came into force in 2014 will affect the usual way of working for many companies. If before almost all annual meetings shareholders were held in June, and the registries were closed in May, therefore, it was in May that the peak of activity fell stock market, now the situation will change. Now investors' interest in securities will increase in June-July and will subside after the cut-off date for dividends. For example, in the calendar of events of Gazprom, the general meeting of shareholders is scheduled for June 27, therefore, in order to receive dividends based on the results of the company's work for last year The shares will be available for purchase in July.
In order to understand how to choose a company in which you will become an investor, and what income you can expect, it is important to understand the mechanism for forming the amount of dividends. More about this.
How the amount of dividends is determined
Relatively speaking, the company divides all the net profit received during the year into 2 parts: one is directed to the further development of the business, and the other is distributed among the shareholders in proportion to their shares. The decision on which part will be invested in the business and which part will be allocated to shareholders is made at the annual meeting of shareholders.
If the company "worked in the red", then the meeting of shareholders may decide to refuse to pay dividends. However, even if the profit is received, shareholders may be left without payments: if it is required to direct all funds for further development business, this goal will be a priority.
The shares of each company are valued by their dividend yield, which is defined as the percentage of dividend per share divided by market value security. In Russia, a good level of dividend yield is 5-10%.
Thus, it is easy to conclude that in order to obtain maximum income under the condition of minimal costs, it is important to choose the right company in which you will become a shareholder and acquire shares in time. How to do this - we will tell in the article -
Dividend — this is a part of the profit of the joint-stock company paid by it for issued shares in accordance with the decision of the general meeting; this is the income of the owner of the share, which is transferred to him by the joint-stock company in the manner established by this company.
After payment in favor and deductions to mandatory funds used in two directions: expansion of activities(reinvestment) and payment of dividends. The size of the latter depends on the results of the work of the joint-stock company, i.e., the amount of profit received by it and the dividend policy pursued by it. On average, usually half of the company's net profit goes to the payment of dividends, the other - to the needs of itself. If the company is developing rapidly, then the share of dividends in net profit is usually small. If market price share is experiencing a downward trend, then one of the ways to overcome the latter is to increase the amount of dividend income per share.
The decision on the payment of dividends and their final amount is made by the general meeting of shareholders, but it is not entitled by law to increase the amount of the dividend, which is recommended to it by the board of directors of the joint-stock company.
Education and dividend payment
Dividend is the net profit per share of a joint-stock company based on the results of current year, distributed among the shareholders in proportion to the number of shares they have of the corresponding categories and types.
The dividend is set in monetary terms or as a percentage of the face value.
In accordance with the Law “On Joint Stock Companies”, a dividend cannot exceed the amount recommended by the board of directors (supervisory board) of a joint stock company.
Types of dividends
Dividends paid by a joint-stock company can be classified according to various types depending on the used classification characteristics:
| Classification characteristics | Types of dividends |
| Stock category |
Ordinary stock:
Advantages privileged shares:
|
| Payment period |
|
| Payment method |
|
| Payout amount |
|
on which dividends are accrued
Dividends are accrued and paid only on those shares that are in the hands of shareholders and fully paid by them.
Shares that do not pay dividends. For some groups of issued (placed) shares, dividends are not accrued.
Shares on which no dividends are accrued or paid:- Not placed (not put into circulation)
- Acquired and on the balance sheet of the joint-stock company by decision of the board of directors
- Companies bought out and on the balance sheet by decision of the general meeting of shareholders or at their request
- Received at the disposal of the company due to non-fulfillment by the buyer of obligations to acquire them
Decision of the meeting of shareholders on dividends. In accordance with the law, a joint-stock company may decide to pay dividends in full or in part or not to pay them at the end of the reporting year.
The law establishes situations in which it cannot decide on the payment of dividends.
Announcement decision annual dividends cannot be accepted:- Until full payment
- If the net asset value requirement is not met
- Until the redemption of all shares at the request of shareholders
- If there are or will appear as a result of the payment of dividends signs of bankruptcy of the joint-stock company
Dividend Recipients
The dividend can be paid to both shareholders and nominal holders of shares entered in the register of shareholders of the company in the prescribed manner.
If there is a nominal holder in the register of shareholders, then dividends are accrued to him, and he is responsible for transferring the accrued dividends to his depositors (specific shareholders).
If, after the date of compilation of the list of persons entitled to dividends (date of closing of the register), the shares or part of them are sold to another person, then the right to dividends remains with their former owner. In this case, the acquirer is entitled to receive dividends only on the basis of a power of attorney issued by the seller, included in the list of persons entitled to dividends.
Order of payment of dividends
Dividends in a joint-stock company are established and paid separately for preferred and ordinary shares.
The owner of a preferred share has an advantage in receiving dividends compared to the owner of an ordinary share.
In turn, the owners of different types of preferred shares may have a different sequence in their receipt. According to the Law "On Joint Stock Companies", dividends are paid first of all on those preferred shares that give the owners an advantage in the order in which dividends are received. If the financial conditions of the joint-stock company allow paying dividends on this type of shares, the possibility of paying dividends on cumulative shares on which dividends were not paid or paid partially in previous periods is considered. If dividends can be paid on the listed two types of preferred shares, the possibility of paying dividends on preferred shares, for which the amount of the dividend is determined by the charter of the company, is considered. Then a decision can be made to pay dividends on preferred shares for which the amount of the dividend is not determined. And lastly, a decision is made on the payment of dividends on ordinary shares.
Authorized capital of 1 billion rubles. divided into preferred shares (25%) and ordinary shares (75%) with the same par value of 1,000 rubles, i.e., a total of 1 million shares. For preference shares, the dividend is set at 14% of the nominal value. What dividends can be declared on shares, if the board of directors recommends that 110 million rubles be allocated for the payment of dividends. net profit?
- Calculation of dividends attributable to preferred shares: 1,000 rubles. * 14 / 100 = 140 rubles. per share, only 140 rubles. * 250,000 shares = 35,000,000 rubles.
- Determination of net profit that can be used to pay dividends on ordinary shares: 110 million rubles. - 35 million rubles. = 75 million rubles
- Calculation of the dividend paid on one ordinary share: 75,000,000 rubles. : 750,000 shares = 100 rubles, or 10% of the nominal value of 1000 rubles.
Form of payment of dividends
A dividend may be paid in cash, and in the cases provided for by the company's charter, in other property, as a rule, shares of subsidiaries or own shares.
If dividends are paid with own shares, then this practice is called capitalization of income, or reinvestment. in the world and Russian practice paying dividends on own shares is quite common. In this case, the dividend is set either as a percentage of one share, or in a certain proportion, taking into account the date of their acquisition (for example, 4 shares per 10 shares previously acquired during the year of ownership or 1 share per 10 previously acquired shares for 1 full quarter of ownership).
Income capitalization modelThe theoretical share price in this model is based on the fact that it is the sum of discounted dividends paid on it.
If a share pays approximately the same dividend every year (period), as is the case, for example, in preferred shares, then the above formula is greatly simplified:
If a share pays a dividend, the size of which increases annually by the same small percentage, then formula 2.1 takes the form:
The main problem of this model is to predict the size of the dividend, which, under the influence of a variety of reasons, usually does not remain the same and its future size can only be discussed over a relatively short period of time, usually calculated in months;
An example of calculating the payment of dividends by shares, or the capitalization of incomeSuppose that 20 shares are purchased on 05/10/04, the decision to pay dividends in the form of own shares was made on 02/20/05 at the rate of 4 shares for 10 acquired over a full year of ownership: 20 shares / 10 shares * 4 shares * 9 months. / 12 months = 6 shares (since full months possessions - 9).
Terms of payment of dividends
The term for the payment of annual dividends may be determined by the charter of the company or by a decision of the general meeting of shareholders on the payment of annual dividends. If the charter of the company or the decision of the general meeting of shareholders does not determine the date of payment of annual dividends, the period for their payment should not exceed 60 days from the date of the decision to pay annual dividends.
If the decision to pay dividends is made, then their payment becomes the responsibility of the joint-stock company.
However, the Law "On Joint Stock Companies" establishes that a company cannot pay declared dividends on shares if, on the date of payment:- the company meets the signs of insolvency (bankruptcy) or they will appear in the company as a result of the payment of dividends;
- the value of the net assets of the company is less than the amount of its authorized capital, reserve fund and the excess of the liquidation value of the placed preferred shares, determined by the charter, over their nominal value, or it will become less than the specified amount as a result of the payment of dividends.
Upon termination of these circumstances, the obligations of the company to pay dividends will be renewed.
Taxation of dividends
The joint stock company is an agent for the collection and timely transfer of taxes withheld from dividends to the budget.
When paying accrued dividends, a joint-stock company withholds taxes.
The procedure for paying dividends in a joint-stock company
In order to determine the procedure for paying dividends, a joint-stock company develops and approves at the general meeting of shareholders a special regulation on the procedure for calculating and paying dividends to a joint-stock company. The key issues in deciding on the payment of dividends are the form of payment of dividends, their size and payment period.