n NISM Certifications
X NISM Series X
Medium

Which distribution is NOT considered a deemed dividend?

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Bonus shares out of accumulated profits to equity shareholders

    Correct answer

  2. B

    Distribution during liquidation out of profits

  3. C

    Distribution on capital reduction out of profits

  4. D

    Loan or advance by a closely held company to a shareholder out of profits

Why this is the answer

Bonus shares issued to equity shareholders are not classified as deemed dividends; however, those issued to preference shareholders are considered as such.

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