Declaration of Interim Dividend

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Querist : Anonymous

Querist : Anonymous (Querist)

26 March 2010 There is a Public Limited (Closely held) Company having paid up capital as Rs.10,77,200
Profit as on (Opening) 01/04/2009 – Rs. 58,00,000
Profit as on 25/03/2010 – Rs.1,25,00,000 (After providing for depreciation)
The Company has not declared any dividend in previous years.

The Directors want to declare an interim dividend of Rs.105 per share (as against a share of Rs. 10/- ).

1. Can they declare such a huge amount as interim Dividend after transferring 10% of profit to General Reserve?
2. After declaration of dividend if Directors default in its payment of interim dividend, then what are the consequences?
3. Can Company pay dividend tax out of previous years profit? (Interim Dividend should not be declared out of reserves – as per secretarial standards.)

M Prabhakar Menon

M Prabhakar Menon (Expert)
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26 March 2010 If your finaciers/banks/others, at the time of sanctioning funds to yr co, have not imposed any conditions restricting payment of any dividend u can go ahead but Income tax on dividend has to be paid.Once the Board has declared its intentions going back on it will be a breach of trust.ROC will entertain complaints and your company's reputation will be at stake.

Querist : Anonymous

Querist : Anonymous (Querist)

26 March 2010 A shareholder can direct the company to give his Dividend entitlement to the other person?

M Prabhakar Menon

M Prabhakar Menon (Expert)
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27 March 2010 No

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