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Declaration of dividend - regarding

vamsikrishna (Article Asisstant) (55 Points)

25 March 2016

If a company is running in loss during the year and It declared 8%, 10%, 12% dividend preceding 3 years respectively. BOD decided to maintain goodwill of company and decided to declare Interim dividend of 12% during the year. What is process to be followed for it ?

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Rahul (CA Final ) (51 Points)
Replied 26 March 2016

Dividend includes Interim Divend also, and as per Rule 3 of The Companies (Declaration and Payment of Dividend) Rules, 2015, in the event of adequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfillment of the following conditions, namely:-

(1) The rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the three years immediately preceding that year:

Provided that this sub-rule shall not apply to a company, which has not declared any dividend in each of the three preceding financial year.

(2) The total amount to be drawn from such accumulated profits shall not exceed one-tenth of the sum of its paid-up share capital and free reserves as appearing in the latest audited financial statement.

(3) The amount so drawn shall first be utilised to set off the losses incurred in the financial year in which dividend is declared before any dividend in respect of equity shares is declared.

(4) The balance of reserves after such withdrawal shall not fall below 15% of its paid up share capital as appearing in the latest audited financial statement.

So, the BOD may declare the Interim dividend keeping in mind the above procedure.

Also to be noted that, the Dividend declared should be deposited in a seperate bank Account in a Schduled bank within 5 days of its declaration.

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Megha Choudhary (Management Trainee) (541 Points)
Replied 26 March 2016

prepare BR for declaration of dividend

separate bnk account

transfer of dividnd to separate bnk account

disclosure in board report

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vamsikrishna (Article Asisstant) (55 Points)
Replied 26 March 2016

Is it declared by BOD Resolution or any need of Specila Resolution ?

Megha Choudhary (Management Trainee) (541 Points)
Replied 26 March 2016

BR IS REQUIRED!!

SR IS REQUIRED IN CASE OF FINAL DIVIDEND (BR+SR)

Rahul (CA Final ) (51 Points)
Replied 29 March 2016

I would like to correct you dear. Since the declaration of Final Dividend in a General Meeting is a matter of Ordinary business, there's No need of Special Resolution (SR) to declare a dividend. An Ordinary Resolution (OR) will be sufficient.

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CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 30 March 2016

Originally posted by : Rahul
	I would like to correct you dear. Since the declaration of Final Dividend in a General Meeting is a matter of Ordinary business, there's No need of Special Resolution (SR) to declare a dividend. An Ordinary Resolution (OR) will be sufficient.