Sumit (Finance Professional) (60 Points)
13 January 2009Hello Friends,
I would like to know your views on following mentioned query:
One Private Limited Company is suffering from losses for certain years and have no monies in their reserve account. So, can it be possible to declare the dividend by such a comapny?
Thanks in advance.
Sumit Phadnis
Mayank Mehta
(Student)
(383 Points)
Replied 13 January 2009
Yes it can declare dividend from the distributable profit, if it have...
Pavan Jain S
(Chartered Accountant)
(1575 Points)
Replied 13 January 2009
Since the company is a loss making and there are no reserves, a company cannot declare dividens.. Infact, how can one declare dividends when there are not profits..
Ya.. one alternative is that if government guarantees dividends and provides funds, the Company can declare dividends
| Originally posted by :Sumit | ||
| " | Hello Friends, I would like to know your views on following mentioned query: One Private Limited Company is suffering from losses for certain years and have no monies in their reserve account. So, can it be possible to declare the dividend by such a comapny? Thanks in advance. Sumit Phadnis |
" |
without profit and reserve how a company can declare dividend.................you can also refer to dividend distribution rules 1975 for more clarification.......
gourav
(student)
(113 Points)
Replied 13 January 2009
Mr. Pawan jain is right in above case the distribution of dividend is only possible if government has given any guarantee for distribution of dividend.
One more thing which is kept in mind is in above case the company is private company and no public interest is involved. In such a case i dont think government may have provided any type of guarantee regarding dividend.
In the light of above rationale my answer is no a private company can not distribute dividend .
CAclubindia
