company have res. in last year & with buisness loss and unabsobed depriciation
this year co incuring loss can com. declair dividend
lalit jain (rajathan) (27 Points)
22 June 2010company have res. in last year & with buisness loss and unabsobed depriciation
this year co incuring loss can com. declair dividend
Ashish Sharma
(Service)
(1028 Points)
Replied 22 June 2010
As per the Companies(Declaration of Dividend Rules out of reserve ) 1975
In the event of inadequacy or absence of profits in any year, dividend may be declared by a company for that year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, subject to the conditions that-
(i)
the rate of the dividend declared shall not exceed the average of the rates at which dividend was declared by it in the five years immediately preceding that year or ten per cent of its paid-up capital, whichever is less;
(ii)
the total account to be drawn from the accumulated profits earned in previous years and transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of its paid up capital and free reserves and the amount so drawn shall first be utilised to set off the lossesincurred in the financial year before any dividend in respect of preference or equity shares is declared ; and
(iii)
the balance of reserves after such drawal shall not fall below fifteen per cent of its paid-up share capital.
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