Interim dividend
This query is : Resolved
21 May 2015
Dear Sir,
Company`s projected financial statements show the profits..
on that basis company has declared the Interim Dividend and paid..
But over all at the end of year the company has incurred loss..
Now what law gives about this situation??
Thank u sir..
Company`s projected financial statements show the profits..
on that basis company has declared the Interim Dividend and paid..
But over all at the end of year the company has incurred loss..
Now what law gives about this situation??
Thank u sir..
21 May 2015
they can pay out of accumulated profits provided conditions mentioned in rule 3 of companies ( declaration of dividend and payment of dividend) rules ,2014
6. DECLARATION OF DIVIDEND OUT OF COMPANY’S RESERVES
In the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus reserves subject to the fulfillment of the following conditions, namely:- 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.
The procedure is as follows:
(1) Give notice as per Section 173 to all the directors of the company for holding a Board meeting. In the meeting, take decision to declare dividend out of company’s reserves because of inadequacy or absence of profits and also fix the date, time and place of the Annual General Meeting. Authorise the Company Secretary or any competent person if company does not have a company secretary to issue the notice of the AGM on behalf of the Board of directors of the company to all the members, directors and auditors of the company and other persons entitled to receive the same.
(2) Ensure that the conditions prescribed under Companies (Declaration and Payment of Dividend) Rules, 2014 are complied with.
6. DECLARATION OF DIVIDEND OUT OF COMPANY’S RESERVES
In the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus reserves subject to the fulfillment of the following conditions, namely:- 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.
The procedure is as follows:
(1) Give notice as per Section 173 to all the directors of the company for holding a Board meeting. In the meeting, take decision to declare dividend out of company’s reserves because of inadequacy or absence of profits and also fix the date, time and place of the Annual General Meeting. Authorise the Company Secretary or any competent person if company does not have a company secretary to issue the notice of the AGM on behalf of the Board of directors of the company to all the members, directors and auditors of the company and other persons entitled to receive the same.
(2) Ensure that the conditions prescribed under Companies (Declaration and Payment of Dividend) Rules, 2014 are complied with.
21 May 2015
company has formed just 3 years back and sufficient reserves are not there.. due to liquidity problem it paid dividend by taking loan and cleared it in 3 months..
is there any chance that Interim dividend can be finalized as Final dividend??
is there any chance that Interim dividend can be finalized as Final dividend??
21 May 2015
nothing has been stated about this and dividend definition under sec 2(35) includes interim dividend also and once it is declared and approved by shareholders it needs to be paid within prescribed timelimit.
21 May 2015
sir if interim dividend is paid then is it mandatory to pay final dividend.. or any other provisions to avoid the dividend??? or if no resolution is passed in AGM for dividend??
21 May 2015
if shareholders do not approve the proposed dividend then no need to pay dividend.
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