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Declaration of dividend

NIKITA (JOB) (16 Points)

02 March 2017

Its a request to all the experts to help me out I have one private company named Craft Silicon Private Limited registered in India and this company wants to declare dividend of Rs 1 milion $ in which 99.99% shareholding is of foreign company i.e. Craft Silicon Kenya Limited registered in Kenya and 0.01% is of one director?????? What is the procedure for declaration of diividend i to be followed by Craft Silicon Private Limited??? as per Co. Act 2013 and what are compliances to be done!!!!!!!!! Will RBI and FEMA will come in picture???If yes then what is the procedure Do Needful

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Jatin Bajaj (CS) (2930 Points)
Replied 04 March 2017

As per section 123 , read with Dividend Rules , before declaration of dividend transfer the percentage of the profit in the general reserves
Company shall not declare dividend unless previous year loses and depriciation not provided in previous years or years are set off against the profit of the Company for the current year.

Th rate of dividend shall not exceed the average rate of dividend of the preeceding 3 years.

the total amount of dividend drawn from accumulated profit shall not exceed 1/10 of paid up capital and free reserves

the balance of reserves after withdrawl shall not fall below 15% of paid up share capital

and as per section 115 0 of the income tax act , the dividend paid to the holding company by domestic subsidiary company is exempt in the hands of shareholders. and if indian subsidiary company has paid CDT , then any dividend declared by holding company shall be reduced by such tax amount

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Ravi Kiran Vustela (Knowledge Seeker) (1353 Points)
Replied 04 March 2017

there is no bar on paying divided in case of profits.... it is optional to transfer a apart of profits to reserve's..... to pay dividend from past reserves you have to follow steps said by Jatin Bajaj Sir

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NIKITA (JOB) (16 Points)
Replied 07 March 2017

Thanks for giving ur valuable time for my query !!!!!!!!!!!!!!!

but sir

i want to know the exact procedure for remitence of dividend by a private company to its shareholder who is a non resident and also the procedure to be followed for fema

i want to know all the compliances/procedure to be done for remittence for dividend to the non resident share holder both under Companies Act 2013 and FEMA