dividend on preferance shares

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Pavan Kumar.S (Querist)
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25 June 2010
hi all,

In the current year, a company has incurred loss. It has to pay preferance dividends. Can it use its earlier profits/reserves. If so will the ( Companies (Declaration of Dividend out of Reserves) Rules, 1975) apply to it.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 June 2010 Preference dividend can be paid out of free reserves. The Companies (Declaration of Dividend out of Reserves)Rules,1975 apply only to equity dividend and to that portion of dividend relating to participating preference shares which is excess of the fixed rate of preference dividend.

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