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Transfer of profits to reserves on Declaration of Dividend

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Somala (Querist)
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08 October 2009 Hi Please help me on this.

If a company has declared dividend for the year more than 10%,but has failed to transfer profits to the reserve.

how can it rectify and what are the consequences?

Ankur Garg

Ankur Garg (Expert)
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08 October 2009 Hi,

Your problem is based on Companies (Transfer of Profits to Reserves) Rules, 1975.

As per rule 4 of the said rules If a company fails to comply with any of the provisions contained in these rules, the company and every officer of the company in default shall be punishable with fine which may extend to five hundred rupees, and, where the contravention is a continuing one, with a further fine which may extend to fifty rupees for every day, after the first, during which such contravention continues"

Reading of the above rule 4 suggests that default can be made good by transfer to reserve.

Regards

Somala

Somala (Querist)
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09 October 2009 Thanks Ankur for the information

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