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Pankaj (Querist)
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12 March 2012 Dear Sir,

I have following query:

Can AOA of a private company provides that "the Company shall not pay any dividend to the Equity Shareholders"

kindly guide me on above as prima facia no restriction in the Companies Act for the above provision.

regards,

pankaj

Ajay Mishra

Ajay Mishra (Expert)
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12 March 2012 Hi

No, read section 9 of the Companies Act, 1956.

Regards

Pankaj

Pankaj (Querist)
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13 March 2012 Sir,

Can we resort to Section 106 of the Companies Act, 1956 and vary the mebers right as regards to dividend?

Making a provision like above will result in denying the basic right to dividend of the Shareholders or it will amount to varying right using Section 106 of the Act?

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Ajay Mishra

Ajay Mishra (Expert)
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13 March 2012 Hi

As per my knowledge you can not do so.

Regards

Jiten Gupta

Jiten Gupta (Expert)
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14 March 2012 Agree with Ajay Ji!!

Equity Shareholders are known to have right of Dividend and right to vote!!

As far as section 106 is concerned a company can vary the rights but can not remove!!!!