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New company bill

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Querist : Anonymous

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Querist : Anonymous (Querist)
14 August 2012 From the new Companies Bill, which may be already passed by now, Chapter VIII has the following provision:

• Instead of transferring a fixed % of profits to reserve before declaring dividend every year , company can on their discretion transfer such % of profit to the reserve before declaring dividend as it deem necessary and moreover such transfer is also not mandatory.

My question is: Does this mean, that the existing section 205 of the Companies Act, which states that the entire profit of the company cannot be declared as dividend, is modified and now the position in law is “Entire profit of company can be distributed as dividend”..?

Kindly clarify
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Amol S Joglekar

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Amol S Joglekar (Expert)
14 August 2012 Yes. The plain reading suggests so. We need to check any other restricting provision elsewhere in the BILL.
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