Section 19 in The Preference Shares (Regulation Of Dividends) Act, 1960
19.
/870Statement of Objects and Reasons.-With the introduction of the new scheme of taxation in relation to profits of companies and dividends therefrom by the Finance Acts, 1959 and 1960, the effective rate of income-tax and super-tax has been reduced in the case of Indian companies and such foreign companies as have made the prescribed arrangements for the declaration and payment of dividends in India. Simultaneously, the tax based on excess dividends and the wealth tax on companies have also been abolished. It was expected that as a result of the saving in the tax payable by companies, they would declare higher dividends to all the shareholders, whether holding preference or ordinary shares. This expectation did not materialised in the case of preference shareholders. It has been brought to the notice of Government that many companies have not made suitable increases in the dividends payable to preference shareholders. In some cases, the companies have indicated that while in principle they agree that preference shareholders should get a larger dividend there are practical difficulties in declaring larger dividends to them. In these circumstances, it is considered necessary to undertake legislation for the purpose of regulating dividends on preference shares issued and subscribed for before the 19t April, 1960.[28th December, 1960]An Act to regulate dividends on preference shares of certain companies.Be it enacted by Parliament in the Eleventh Year of the Republic of India as follows:-
