DIVIDEND WARRANT. An order, or warrant, issued by a company, and drawn upon its bankers, in favour of a member of the company. for payment of the interest or dividend due to him upon his holding of shares or stock in the company.
Section 95 of the Bills of Exchange Act, 1882, is :—" The provisions of this Act as to crossed cheques shall apply to a warrant for payment of dividend." (Sec CROSSED CHEOUE.) Section 97, s.s. 3, provides : " Nothing in this Act or in any repeal effected thereby shall affect : " (d) The validity of any usage relating to dividend warrants, or the indorse ments thereof." There is usually a space provided at the foot of dividend warrants for the proprie tor's signature.
A dividend warrant must be signed by the person to whom it is payable, and, unless authorised by the company, a per procura tion signature should not be accepted. If payable to John Brown or bearer, it never theless requires John Brown's discharge.
Where a dividend warrant is payable to several persons, it is the custom to pay it on being signed by one of them. But in the case of an interest warrant all the persons named should sign.
Many Dividend Warrants are crossed & Co. and the effect is the same as when a cheque is so crossed (Section 95 above). The banker on whom a crossed
warrant is drawn should pay it only to another banker.
All dividend warrants, like cheques, though for a less amount than Z2, require a penny stamp. This does not apply to interest warrants on Consols and other British Government stocks. (See Stamp Act, 1891, Exemption 6, under BILL OF Ex CHANGE.) Customers frequently instruct the com panies in which they have investments to pay the dividends direct to their bankers, who forthwith credit their accounts, thus saving the customers a good deal of trouble ; these orders continue in force until cancelled by the customer ; most banks have their own printed forms. The companies make the warrants payable to the banker, generally adding the name of the shareholder at the foot , the banker discharges the warrants in the same way as a shareholder.
An ordinary dividend warrant is practi cally a cheque in a special form, but the dividend warrant of a bank, being drawn by a bank on a bank, is of the nature of a bank draft rather than a cheque. (See INDORSE NIENT, LOST DIVIDEND WARRANT.)