Non payment of dividend on cumulative redeemable preference

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2012 Our company could not pay dividend on 4% Cumulative Redeemable Preference Shares due to the loss, so whether we need to make provision in the current year’s books for accumulated dividend. If in case company continuously incurres loss till the redemption of shares and even in the year of redemption company incurres loss, whether company is liable to pay accumulated dividend for all the previous year and if yes how we can pay dividend as there is a loss and company doesn’t have distributable surplus.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
Follow

07 April 2012 Yes, You will have to make provision for dividend, since these are cumulative preference shares.

If the company continuosly incurres the losses then in such a case, the company will go in liquidation and all the procedure of liquidation need to be followed.