The Preference Shares (Regulation of Dividends) Act, 1960

summary of the Preference Shares (Regulation of Dividend) Act, 1960,
Key Provisions
1. Applicability: - Extends to the whole of India, with specific exceptions and modifications.
2. Dividend Regulation: - Pre-1st April 1960 Shares:
• Additional dividend based on whether the original dividend was free of or subject to income-tax.
• Adjustments for certain shares and income tax considerations.
3. Overriding Effect, Exemptions, Rule Making Power, and Amendments are outlined in the original detailed summary.

Legislative History:

The Preference Shares (Regulation of Dividends) Act, 1960

Act Title - The Preference Shares (Regulation of Dividends) Act, 1960

Act Number / Year - 63 of 1960

Act ID (India Code) - 196063

Presidential Assent Date - December 28, 1960

Enforcement Date - December 28, 1960

Nodal Ministry - Ministry of Corporate Affairs

Precedent & Historical Rationale

● Adjustment for Corporate Tax Restructuring - Enacted to regulate and stipulate adjustments in the rate of dividend payable on preference shares issued by companies prior to April 1, 1960, following significant changes to corporate taxation in the Finance Act, 1959.

● Protection of Preference Shareholder Yields - Formulated to ensure that the withdrawal of corporate tax concessions on preference dividend payouts did not unfairly diminish the net returns guaranteed to preference shareholders under existing company articles.

Parliamentary Trajectory & Enactment

● Formulation - Introduced by the Ministry of Finance / Corporate Affairs to resolve statutory equity imbalances created by transitional corporate tax reforms.

● Parliamentary Passage - Debated and passed by both Houses of Parliament (Second Lok Sabha and Rajya Sabha) during the December 1960 session.

● Presidential Assent - Received Presidential Assent on December 29, 1960.

● Enforcement - Enforced on December 28, 1960

Source - Official Record of Parliament, India Code, and Ministry of Corporate Affairs.