MANAGEMENT

Detailed explanation-1: -Businesses can declare higher dividends when the tax rates are relatively lower since the money paid as taxes and rates will be of lesser burden to the company. The excess amount of funds available to the company can be distributed as dividends to its investors.

Detailed explanation-2: -A company having higher and stable earnings can declare higher dividends than a company with lower and unstable earnings.

Detailed explanation-3: -Explanation: When a company has a high profit earning capability in a future project then the company is not likely to declare a high dividend. The retained earnings will become their investment for the future project.

Detailed explanation-4: -As per Rule 3, the conditions for declaration of dividend in the event of inadequacy or absence of profits in any year are as follows: (1) The rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the three years immediately preceding that year.

Detailed explanation-5: -Dividend is required to be paid by the Company to it’s shareholders within 30 days of it’s declaration. If the dividend remains unpaid/unclaimed for 30 days from date of declaration, such dividend is to be transferred by the Company to a special account in a scheduled bank within the next 7 days.