Comment on the following: Dealing with dividend is the prerogative of Board of directors. However there are certain parameters included in dividend distribution policy of a company.

Regulation 43A of the SEBI (LODR) Regulations, 2015 provides for formulation of policy for dividend distribution which broadly specifies the external and internal factors including parameters that may be considered while declaring dividend and the circumstances under which the shareholders of the company may or may not expect dividend. The dividend distribution policy shall include the following parameters: the circumstances under which the shareholders of the listed entities may or may not expect dividend; the financial parameters that shall be considered while declaring dividend; internal and external factors that shall be considered for declaration of dividend; policy as to how the retained earnings shall be utilized; and parameters that shall be adopted with regard to various classes of shares. Therefore, the top 500 listed entities based on market capitalization (calculated as on March 31 of every financial year) is required to formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites. The listed entities other than top 500 listed entities based on market capitalisation may also disclose their dividend distribution policies on a voluntary basis in their annual reports and on their website.