Hi,
a private ltd company has paid up capital of 15 lakhs (equity shares of FV 10 each).
The company wants to declare Interim dividend, which is also dividend for the first time.
The company has not transferred any amount to general reserves to date. (Year of incorporation was 2006-07)
It is proposed to pay 75 lakhs as dividend out of the P&L balance shown in the balance sheet.
This makes the proposed dividend 500%.
Profit and loss balance runs into 600 lakhs before declaration of dividend.
Can the company transfer to the General reserve from the P&L shown in the balance sheet?
Now, problem is that during the year, company has significantly reduced operations, and hence does not have profit.
Can the transfer from P&L be treated at par with transfer from current year profit?
Please advice on the same.
Advance Thanks for your replies.
CAclubindia
