Declaration of interim dividend

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A Raghavendra (Querist)
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11 March 2016 Whether a company can declare interim dividend out of its free reserves despite of losses in consecutive years? If Yes, please let me know the formalities to be fulfilled in this regard as per the CA2013.

Read more at: https://www.caclubindia.com/forum/declaration-of-interim-dividend-by-the-company--352823.asp

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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14 March 2016 Yes

In case the company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during the immediately preceding three financial years

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A Raghavendra

A Raghavendra (Querist)
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14 March 2016 Dear CS Mitesh Mehta sir,

In case company has not declared any interim or final dividend during the immediately preceding three financial years. The company has losses in those immediately preceding three financial years, what would be the position? Can a PVT Ltd Co, still declare Interim Dividend? Please update me in this regard.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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14 March 2016 Yes. Above condition shall not apply to the company which has not declared any dividend in each of the 3 years immediately preceding that year.

Further note the following
(ii)The total amount to be drawn from such accumulated profit shall not exceed 1/10th of the sum of its paid-up share capital and free reserves as appearing in the latest audited financial statement.

(iii) The amount so withdrawn shall first be utilised to set off the losses incurred in the financial year in which dividend is declared before any dividend in respect of equity shares is declared.

(iv) The balance of reserves after such withdrawal shall not fall below 15% of its paid up share capital as appearing in the latest audited financial statement.

(v) No company shall declare dividend unless previous losses and depreciation not provided in previous year or years are set off against profit of the company of the current year.

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A Raghavendra

A Raghavendra (Querist)
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14 March 2016 Dear Sir,

Thanks a lot. It means we can declare the interim or final dividend with full filing the above conditions mentioned herein supra.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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14 March 2016 yes. Interim dividend can be declared after full filing the conditioned mentioned

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