Dividend for Pvt Ltd Co

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Akshay (Querist)
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08 October 2010 A private lts co wants to declare dividend. It has post tax profit of 50 Lakhs for the year. for declaration of dividend i have to transfer 10% to reserves ..say 5 lakhs...then can i distrubute remaining 45 lakhs as dividend?

also the company has previous years accumulated profit upto 30 lakhs...can i pay dividend out of this profit as well after one year....that in this year....

the paid up capital of the company is 1 Lakhs and has 10000 shares...can i pay 45 lakhs as dividend (at such a high % of dividend)...if yes then whether all provisions of seperate bank account etc are applicable to the private limited company?

if dividend cannot be paid that high...is there any other way the profits can be distributed amongst shareholders?

Mohit Garg

Mohit Garg (Expert)
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11 October 2010 Dear Akshay,

In relation to your Current Profits you need to transfer max.10% to the reserve and balance you can distribute as dividend.

as per my understanding Declaration of Dividend from previous year profits you also need to follow the same procedure as above. Transfer 10% to reserve and declare remaining as dividend.
Other way to Distribute Profit is to Issue Bonus shares.

Others views are invited and correct me if my understanding is wrong.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 August 2023

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