Dividend declaration rules

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Querist : Anonymous

Querist : Anonymous (Querist)

05 January 2015 Hi,

One private Company having paid up capital of Rs.1 lac & reserves of Rs.3 crores

from date of incorporation 2003 till now no dividend is declared

This FY they planning to declare dividend what is the maximum as well minimum limit of dividend they can declare ??

Thanks in Advance

CS Mitesh Mehta

CS Mitesh Mehta (Expert)

06 January 2015 DECLARATION OF DIVIDEND OUT OF COMPANY’S
RESERVES

a. The rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the three
years immediately preceding that year. However, this condition shall not apply to a company, which has not declared any dividend in each of the three preceding financial year.
b. The total amount to be drawn from such accumulated profits shall not exceed one-tenth of the paid-up share capital and free reserves as appearing in the latest audited
financial statement.
c. The amount so drawn 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.
d. 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

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