One private limited company wants to distribute interim dividend to its shareholders. It just want to distribute 90% of Reserve and Surplus as dividend. Whether it can distribute ?? What other conditions need to be fulfilled ??
02 February 2017
aS PER SECTION 123 , READ WITH dIVIDEND rULES, a bOARD MAY DECLARE INTERIM DIVIDEND DURING ANY FINANCIAL YEAR OUT OF SURPLUS IN PROFIT AND LOSS ACCOUNT AND OUT OF PROFIT IN THE FINANCIAL YEAR IN WHICH SUCH INTERIM DIVIDEND IS SOUGHT TO BE DECLARED. THE RATE OF DIVIDEND DECLARED SHALL NOT EXCEED THE AVERAGE RATE OF DIVIDEND DECLARED DURING THE LAST 3 YEARS PREECEDING THE PREVIOUS YEAR. THE TOTAL AMOUNT DRAWN FROM ACCUMULATED PROFIT SHALL NOT EXCEED 1/10 OF PAID UP SHARE CAPITAL AND FREE RESERVES. THE BALANCE OF RESERVES AFTER WITHDRAWN SHALL NOT FALL BELOW 15% OF ITS PAID UP SHARE CAPITAL
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