Dividend payment out of capital reserve

Ganesh (Student) (33 Points)

08 February 2016

Hiee everyone

Can any one help me with the following one.

Is it possible to pay dividend out of capital reserve. If yes are there any specific conditions to be satisfied.

Iam not asking declarion of dividend out of pas profits.

Thanking you

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CS Divesh Goyal (Practicing Compnay Secretary) (50530 Points)
Replied 08 February 2016

dividend can be paid only from the following sources

Source for payment of Dividend:

Dividend can be paid out of Followings: Section- 123 (1)(a)

Profit of the current year after providing of the depreciation; or
Profit of the previous financial year or years after providing for depreciation for previous years; or
Out of the money provided by Central or State Government for payment of dividend in pursuance of guarantee given by that, if any.

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