Conditions governing voluntary transfer of a higher percentage.-
Nothing in Rule 2 shall be deemed to prohibit the voluntary transfer by a company
of a percentage higher than 10 per cent of its profits to its reserves for any financial
year, so however that :-
"(i) Where a dividend is declared,-
(a) a minimum distribution sufficient for the maintenance of dividends to
shareholders at a rate equal to the average of the rates at which dividends
declared by it over the three years immediately preceding the financial year
; or (b) in a case where bonus shares have been issued in the financial year in
which the dividend is declared or in the three years immediately preceding
the financial year, a minimum distribution sufficient for the maintenance of
dividends to shareholders at an amount equal to the average amount
(quantum) of dividend declared over the three years immediately preceding
the financial year, is ensured :
Provided that in a case where the net profits after tax are lower by 20 per
cent or more than the average net profits after tax of the two financial years
immediately preceding, it shall not be necessary to ensure such minimum
distribution."
CAN SOMEONE EXPLAIN ME THE HIGHLIGHTED PORTION? I AM GETTIN CONFUSED WITH IT !!!
THANKS IN ADVANCE
MEGHAKANNAN
CAclubindia
