payment of dividend by a pvt ltd company
This query is : Resolved
19 December 2009
A pvt ltd company have 3 directors as well as shareholders, paid up capital is 1.00 lac, where as its reserve & surplus under Profit & Loss a/c have more than 1.00 crore after tax because of exemptions u/s 10b availed by the company. Now, what is the procedure of declaring & paying of Dividend to the shareholders out of the profit
19 December 2009
This would depend on how you have shown the Profits. If the Profits are kept in the Profit and Loss Account under the Reserves and Surplus head, then the entire amount can be declared as interim or final dividend, as the case may be.
However, in case the amount is transferred to General Reserve, then that amount can be utilised for payment subject to the conditions laid down in Companies (Payment of Dividend out of Reserves) Rules. The balance Profit in the Profit and Loss Account can be utilised for payment of dividend in the normal procedure.
In case the dividend is to be given during the year, then it is called as Interim Dividend which can be paid by way of passing a Board resolution and regularising it as final dividend in the AGM. If the dividend is to be paid at the end of the year, then in the Board Meeting where the accounts are to be adopted, pass a resolution for final dividend. The Board will recommend a dividend. The members will approve it in the AGM. Then in accordance with the provisions of Section 205, the payment has to be made.
However, in case the amount is transferred to General Reserve, then that amount can be utilised for payment subject to the conditions laid down in Companies (Payment of Dividend out of Reserves) Rules. The balance Profit in the Profit and Loss Account can be utilised for payment of dividend in the normal procedure.
In case the dividend is to be given during the year, then it is called as Interim Dividend which can be paid by way of passing a Board resolution and regularising it as final dividend in the AGM. If the dividend is to be paid at the end of the year, then in the Board Meeting where the accounts are to be adopted, pass a resolution for final dividend. The Board will recommend a dividend. The members will approve it in the AGM. Then in accordance with the provisions of Section 205, the payment has to be made.
21 December 2009
Thank you for the reply.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CLOSING STOCK QUERY
- Exiting partner in partnership firm in gst portal
- Taxability of credit in canara bank ET & T section (NRO)
- CASH GIFT FROM BLOOD RELATIVE
- TDS offline utility
- Due Date Clarity
- Gst on travel by air for business purposes
- Consequences of Non-Deduction of TDS under Income Tax???????????????
- Difff in ais receipts and gst turnover
- Rent claimed on building given on permissive possession basis
- Query regarding Item 61/62/63 vs Item 64 in ITR-3
- Account freezed for Ineligible ITC Scrutiny for GST Annual Return
- TDS on property - Form 141 query
- Seeking Advice: High Tax Shortfall on Job Switch + Let-Out House Property Loss in FY 2025-26
- Housing Society-ITR5
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
