Dividends
This query is : Resolved
05 June 2009
"Declaration of further dividend for the second time out the past year's profit is illegal & ultra vires of the articles of association and the Companies Act,1956"
IS IT TRUE?
And if yes then
What about interim dividend?? can interim dividend be declared out of the profits of the previous years????
IS IT TRUE?
And if yes then
What about interim dividend?? can interim dividend be declared out of the profits of the previous years????
05 June 2009
Hi,,,,
As per my opinion Declaration of “further” dividend for the second time out the past year's profit would be illegal & ultra vires of the articles of association and the Companies Act, 1956
Further, As per Deptt of Companies Affairs Circular No. 22 [7/9/74-CL-II], dated 25-09-1975 it is beyond the powers of the company to declare a “further” dividend after the declaration of dividend at the Annual General Meeting.
INTERIM DIVIDEND
As per Section 205(1C) provisions contained in section 205, 205A, 205C, 206, 206A and 207 shall, as far as may be, also apply to any interim dividend.
In view of the section above Section 205A(3) also applicable & available for interim dividend. Hence as per my opinion interim dividend can be declared out of the profits of the previous years in accordance with section 205A (3) read with Companies(Declaration of dividend out of reserve) Rules, 1975.
Best Regards
As per my opinion Declaration of “further” dividend for the second time out the past year's profit would be illegal & ultra vires of the articles of association and the Companies Act, 1956
Further, As per Deptt of Companies Affairs Circular No. 22 [7/9/74-CL-II], dated 25-09-1975 it is beyond the powers of the company to declare a “further” dividend after the declaration of dividend at the Annual General Meeting.
INTERIM DIVIDEND
As per Section 205(1C) provisions contained in section 205, 205A, 205C, 206, 206A and 207 shall, as far as may be, also apply to any interim dividend.
In view of the section above Section 205A(3) also applicable & available for interim dividend. Hence as per my opinion interim dividend can be declared out of the profits of the previous years in accordance with section 205A (3) read with Companies(Declaration of dividend out of reserve) Rules, 1975.
Best Regards
05 June 2009
Thanks for appreciation Akash.
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