Explanation:
Dividends refer to the distribution of a company's profits to its shareholders. Dividends are usually paid as a percentage of the paid-up capital of the company. The paid-up capital is the portion of the authorized capital that has been actually issued to shareholders and paid for by them.

Dividends are paid out of the profits earned by the company during a particular financial year. The net profit of a company is the excess of its revenue over its expenses and taxes. However, dividends are paid after deducting any appropriations made for reserves or other purposes.

Authorized share capital is the maximum amount of capital that a company can issue and is mentioned in the memorandum of association of the company. Called-up capital is the portion of the authorized capital that has been called up by the company from its shareholders.

Therefore, the correct option is C - Paid-up capital, as dividends are paid on the basis of the amount of capital that has been issued and paid for by the shareholders.

Summary:
- Dividends are the distribution of a company's profits to shareholders.
- Dividends are usually paid as a percentage of the paid-up capital.
- Paid-up capital is the portion of the authorized capital that has been issued and paid for by the shareholders.
- Dividends are paid out of the profits earned by the company after deducting any appropriations made for reserves or other purposes.