PE- II MAY – 2006
Paper -3, Business and Other laws

We are herewith furnishing the questions and answers as produced in suggested answers to questions set at the PE-II Examination Group I May, 2006

Question No.10
(b) (i) Can the declaration of Board of Directors of interim dividend be revoked.


Ans: Dividend
(i) The Articles of a company may empower the directors to declare interim dividends, i.e., dividends in between its two annual general meetings. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company. (Article 86 of Table A)

An interim dividend is not a debt. It is a settled law that in case of an interim dividend which the directors have resolved to pay, they have an option at any time before payment to review their decision and resolve not to pay.

Hence, interim dividend declared by Board of Directors may be revoked.

We wish to draw your kind attention to the following:

Section 2(14A) defines dividend as “dividend” includes any interim dividend, [w.e.f 13.12.2000]

Section 205(1C): The provisions contained in sections 205,205A, 205C, 206,206A and 207 shall, as far as may be, also apply to interim dividend.

205(1A): The Board of directors may declare interim dividend and the amount of dividend including interim dividend shall be deposited in a separate bank account within five days from the date of declaration of such dividend.

205(1B): The amount of dividend including interim dividend so deposited under sub section (1A) shall be used for payment of interim dividend.

Friends
, in view of the above changes in the law w.e.f 13.12.2000, our understanding of the provisions as far as revocation of interim dividend is that, interim dividend can not be revoked. Even if it can be revoked then it has to be revoked within five days from the date of declaration i.e. Board resolution.

Please clarify this.

Can a Company be a partner in a partnership firm? If possible, how can the creditors of the partnership firm proceed against the company for recovery od their dues incase of dissolution of the firm? If the company is held liable, from what source will the company pay off the firm's creditors and what will be the impact on the company's own creditors and shareholders?

sir,
after the new amendment dividend includes interim dividend. so rules that apply to dividend applies to interim dividend. so can board of directors revoke interim dividend after being declared?

thanking you
tima

Hi,

I am runing a partnership firm with one partner, which is established 2 months before.Nature of business is to provide Security Personnels ( Guards )
Please advice me on following things -

1) Is it possible to convert the same firm in to a Pvt. Ltd company ?

2) If yes then, service tax , PF, ESIC, PT registration nombers will remain same ? Or we have to register again ??

3) How many days it will take to convert the same? and what will be the total aprox expences for that ??

Please advice.

dear all,
which section of companies act provides that a partnership firm cannot become a member of a company?

Dear All,



A wholly Owned Subsidiary(WOS) of foreign company wants to issue 5% of the share capitals to its one of its employee.Please state what steps required to be complied.



Thanking you,



With Best Regards,



Rakesh

hi

what do u mean by distinctive nos??? what is its purpose??? why do we mention it in share certificates??? how do we get the distinctive nos on share certificates??

How to remove an auditor of a private limited company , what steps to be followded?
1. If removed at AGM
2. If removed at EGM

Whether existing auditor has right to challange the removal as un justified?

C.A Rajib Deb

Company paid upshare capital is 15 lacs

Accumulated lossed 9.5 lacs

Cash and Bank Balances 5.5 Lacs

Share holders want to withdraw the cash and bank balance.

What is the easiest option available for closing the company ?

If a company fails to file e form 5 and 23 within 30 days from the date passing resolution for increasing the share capital, what are the consequences the Company would face? Is there any provsion for levy of interest for the delayed period on the stamp duty payable?