Dividend out of past reserves
This query is : Open
19 October 2010
As per provisions in the companies act, it is specifically mentioned that if a company incurs loss during the year, it can still declare dividend out of past reserves provided it fulfills all the 3 conditions.
1 condition out of that is - Max dividend which a company can declare in case of loss is - Average Rate of last 5 years dividend paid or 10% of paid up capital, whichever is less
Then how come a listed company like Indiabulls Securities (Auditor - Deloitte) declared 100% dividend for FY09 even though it reported net loss for that year.
Could some expert please enlighten me with the rules for distributing dividend in case of loss.
1 condition out of that is - Max dividend which a company can declare in case of loss is - Average Rate of last 5 years dividend paid or 10% of paid up capital, whichever is less
Then how come a listed company like Indiabulls Securities (Auditor - Deloitte) declared 100% dividend for FY09 even though it reported net loss for that year.
Could some expert please enlighten me with the rules for distributing dividend in case of loss.
19 October 2010
Sir, I am referring to financial year 2008-09. In FY09 company reported Net loss of Rs 12.88 cr (Loss before tax of Rs 19.68 cr). Despite this it distributed 100% dividend.
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