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Declaration of dividend various situations

student (Final) (157 Points)

03 July 2017

Dear sir,

I am confused with the provisions of declaration of dividend. Pls kindly help me in understanding the maximum amount of dividend the company can declare following various situations. Suppose,

Paid up capital -1

Other than free reserves Bal - 1

Various situations

Situations	A	B	C	D	E	F	G
P&l(CY)	100	100	(100)	(100)	(100)	(100)	(100)
P&L(cr.)	100	(100)	100	0	(100)	(100)	(100)
GR	100	100	100	100	100	200	300

Thanks in advance

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1 Replies

Karan Batra (Creator: TheProTalks) (2325 Points)
Replied 07 July 2017

An easy way to remember how much dividend you can give is mentioned below:

Pre steps Dividend is to be given from C/Y profits, in case you need to take from GR then 4 Steps come into place

Step1 Dividend which can be given by Rate of Dividend matching to the Average Rate of Dividend of past 3 F/Ys

Step2 Lower of following can be given

10% of PUSC & FR
Equivalent amount after leaving 15% pf PUSC in FR

Step3 Deduct all losses from Step 2 whether P/Ys or C/Y

Step4 Take lower of Step 1 and 4

Post Steps Any balance can be taken from P&L Cr balance

A	B	C	D	E	F	G
200	100	100	-	-	-	-
200 can be given freely but if Dividend is more than 200 then Rule 3 kicks in and amount all the amount of 100 cannot be used.	Please note that if amount of Dividend to be declared is more than 100 then Rule 3 kicks in and amount all the amount of 100 of loss is to be adjusted.	Please note that if amount of Dividend to be declared is more than 100 then Rule 3 kicks in and amount all the amount of 100 of loss is to be adjusted.	Please note that even if 100 GR is used you would have to adjust the 100 loss also in Step 4 which will result in 0 dividend.	Please note that even if 100 GR is used you would have to adjust the 200 loss also in Step 4 which will result in 0 dividend.	Please note that even if 200 GR is used you would have to adjust the 200 loss also in Step 4 which will result in 0 dividend.	Please note that even if 300 GR is used you would have to adjust the 200 loss also in Step 4 which will result in 0 dividend.