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Please help!! Help!!! Help!!!!

preeti (student) (143 Points)

01 December 2009

What is the requirement of Company Law for the transfer of profit to General Reserve in case where no dividend is declared in the current year as well as in the immediately preceeding 3 years? Is there any minimum or maximum percentage limit?

Preeti

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3 Replies

Lokesh (CS professional) (493 Points)
Replied 01 December 2009

Preeti I think that it is at the will of the directors of the co. whether to declare dividend or not and not a compulsion.

If in some year they feel that dividend should't be declared then they will not call the AGM. However if dividend is declared then it must be distributed within 30 days.No need to distribute for previous years.

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preeti (student) (143 Points)
Replied 02 December 2009

Originally posted by :Lokesh
"	Preeti I think that it is at the will of the directors of the co. whether to declare dividend or not and not a compulsion. If in some year they feel that dividend should't be declared then they will not call the AGM. However if dividend is declared then it must be distributed within 30 days.No need to distribute for previous years.	"

My question was not regarding declaration of dividend but regarding TRANSFER OF PROFIT TO GENERAL RESERVE. Is there any restriction on the amount of profit to be transferred in case when no dividend is declared in the current year as well the preceeding 3 years???

Preeti.

Lokesh (CS professional) (493 Points)
Replied 02 December 2009

It's not a compulsion on the part of the co. to declare dividend .

if the co. feels to keep it's profit in general reserve for any future activity or oppurtunity then it may't declare dividend for the current year and previous years as well.

hence there is no restriction on transferring profit to general reserve without distributing dividend irrespective of whether dividend pertains to current year or previous years.