Whenever any pvt. company makes profit and if it is distributing dividend to its director, then is it mandatory to transfer some portion of profit to General Reserve and how much? OR in geeral I would like to know that treatment given to General Reserve in case of PRofit making company?
21 May 2009
Certain percentage of the profits has necessarily to be transferred to reserves before declaring dividends. For details of the % pl look in The Companies (Transfer of Profits to Reserves) Rules,1975 particularly clause 2 and 3.
CAclubindia
