Meaning of Dividend :

The literal meaning of the term “dividend‟ stands for the sum payable as interest on loan or as share of profit to shareholders in a business of a company or a profit of a company to the creditors of the ruined property or as an individual‟s share of it. Whereas in commercial sense, dividend has two meanings: one in relation to companies as going concerns as a portion of profits earned and allocated as payable to the shareholders yearly or whenever declared, and the other arising in winding up as that part of the residuary balance left after settling all creditors in full to be divided as between the contributories according to their respective rights from out of the value of the assets realized. The term dividend is used in this chapter in the former sense i.e. portion of profits allocated to the holders of shares.