Declaration of dividend sec 123 of companies act 2013

Others 3242 views 3 replies

Hello Friends,

 
I have noticed a significant  change in provisions related to Declaration of Dividend Section 123 of Companies Act 2013 which is as follow,
 
There is no express provision regarding weather past losses required to be set off before declaring dividend. In Companies Act 1956 clause b of the first proviso to section 205 of the Act requires that Company must provide, in respect of each previous financial year, the loss for that year or the amount of depreciation which ever is lower.
 
In short provision relating to Sec 205 (1)(b) is not considered in new law. Which means Company can declare dividend if it has profit in current year and loss in previous year without providing for losses.
 
Next, transfer to reserve in line with Transfer to reserve rules  of old Act are not provided in new Act, as the section says "Company may transfer..........."
 
 
Kindly Share Your views.
Replies (3)

Pl refer Rule 3 of Companies (Declaration & Payment of Dividend) Rules 2014 for reply to your query.

 

Sir,

Rule 3 is regarding declaration of dividend out of reserve and does not say anything when Company has profits in current year and losses in previous year.

Rules talks about inadequacy of profit in current year.

 

Pl refer Rule 3(5).

 

 


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