Dividened out of reserves?

This query is : Resolved

Nidhi Jain (Querist)
Follow

07 April 2012 One of our Pvt Co. ha nil profit in Current year but having huge accumulated profitsof previous years now issue is that we want to distribute these accumulated profits to shareholders bur Dividened (Delaration of Dividened out of reserve) Rules 1975impose a resriction on the utilisation of such Accumulated Profits. In this Co.
Paid up capital is Rs I Lack
accumulated profits 11Lakhs
Is there any exception of these Rules or how can a co. can utilise these accumulated profits pls give your valuable advice to solve this matter?

Ajay Mishra

Ajay Mishra (Expert)
Follow

07 April 2012 Hi

Section 205(1)(b) provides that if a company has incurred loss in any previous year or years, then the amount of loss or an amount which equal to the amount provided for depreciation for the year or those years whichever is less shall be set off against the profit of the company for the year for which dividend is proposed to be declared or paid. Therefore, it cannot pay dividend in the latter year unless the company has adjusted the amount of loss against the profits of the year referred to above. The company shall ensure that the previous year's depreciation will be duly provided before paying dividend.

Every company shall transfer a portion of its net profit of the year to general reserve before deciding to pay dividend. The amount of net profit transferred to reserve shall vary with the rate of dividend proposed to be paid and as per the Companies (Transfer of Profits to Reserves) Rules, 1975.

Regards

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

nandeesh mashyal

Sivashankary Sivaramakrishnan

tsrandcompany@gmail.com

Tanishka Khandelwal

Krishnan V

Subscribe Now

Dividened out of reserves?

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA