Amount of dividend suggested by board of directors (BOD) to shareholders for approval in annual general meeting (AGM) is called proposed dividend.
As BOD has the knowledge of all the future plans requiring cash, liquid assets available and the amount of profit that entity should distribute and retain therefore, it is in BOD’s power usually to recommend the amount of dividend which later shareholders can approve in the annual general meeting. Whether shareholders can increase or decrease the amount depends on the rights of shareholders in articles of association (AoA) or governed by the rules and general practice of that particular jurisdiction.