Difference Between Final Dividend and Interim Dividend (7 Points) | Important Article

Difference Between Final Dividend and Interim Dividend

Difference Between Final Dividend and Interim Dividend
Difference Between Final dividend and Interim Dividend

Meaning of Final Dividend

It is that part of the profits of the company which is distributed amongst its shareholders. Dividend is ‘a share in distributable profits of the company to which the shareholder is entitled when it is formally declared b the company.’


The Institute of Chartered Accountants of India has defined Dividend as, “a distribution to shareholders out of profits or reserves available for this purpose.

Meaning of Interim Dividend

Dividend declared b the Board of Directors between two Annual General Meetings is called Interim Dividend. Interim dividend is paid in the middle of the accounting year i.e. before the finalization of annual accounts for the year. Opinion of the company’s Auditors should be taken before declaring Interim Dividend.

Difference Between Final Dividend and Interim Dividend

PointsFinal DividendInterim Dividend
1) MeaningIt is declared and paid after the
close of the financial year.
It is declared and paid between
two AGMs of an accounting
2) Who DeclaresIt is decided and recommended
by the Board of Directors. It is
declared by the shareholders in
the AGM.
It is decided and declared by
the Board of Directors in the
Board Meeting.
3) AuthorizationIt’s declaration does not need
authorization by Articles of
It can be declared only if
Articles of Association permits
its declaration.
4) When DeclaredIt is declared at the Annual
General Meeting of the company
It is declared between two
Annual General Meetings of the
5) RateRate of final dividend is always
higher than Interim Dividend.
Rate of Interim dividend is lower than final dividend.
6) SourceIt is declared from different
sources like; current year’s
profits, free reserves, capital
profits, Mone provided by
Govt. for dividend, etc.
It is declared out of profits of
the current accounting year.
7) Accounting Treatment / AspectIt is declared only after the
accounts of the year are prepared
and finalized.
It is declared before preparation
of the final accounts of the

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