Dear sir,
I am confused with the provisions of declaration of dividend. Pls kindly help me in understanding the maximum amount of dividend the company can declare following various situations. Suppose,
Paid up capital -1
Other than free reserves Bal - 1
Various situations
| Situations | A | B | C | D | E | F | G |
| P&l(CY) | 100 | 100 | (100) | (100) | (100) | (100) | (100) |
| P&L(cr.) | 100 | (100) | 100 | 0 | (100) | (100) | (100) |
| GR | 100 | 100 | 100 | 100 | 100 | 200 | 300 |
Thanks in advance
An easy way to remember how much dividend you can give is mentioned below:
Pre steps Dividend is to be given from C/Y profits, in case you need to take from GR then 4 Steps come into place
Step1 Dividend which can be given by Rate of Dividend matching to the Average Rate of Dividend of past 3 F/Ys
Step2 Lower of following can be given
Step3 Deduct all losses from Step 2 whether P/Ys or C/Y
Step4 Take lower of Step 1 and 4
Post Steps Any balance can be taken from P&L Cr balance
|
A |
B |
C |
D |
E |
F |
G |
|
200 |
100 |
100 |
- |
- |
- |
- |
|
200 can be given freely but if Dividend is more than 200 then Rule 3 kicks in and amount all the amount of 100 cannot be used. |
Please note that if amount of Dividend to be declared is more than 100 then Rule 3 kicks in and amount all the amount of 100 of loss is to be adjusted. |
Please note that if amount of Dividend to be declared is more than 100 then Rule 3 kicks in and amount all the amount of 100 of loss is to be adjusted. |
Please note that even if 100 GR is used you would have to adjust the 100 loss also in Step 4 which will result in 0 dividend. |
Please note that even if 100 GR is used you would have to adjust the 200 loss also in Step 4 which will result in 0 dividend. |
Please note that even if 200 GR is used you would have to adjust the 200 loss also in Step 4 which will result in 0 dividend. |
Please note that even if 300 GR is used you would have to adjust the 200 loss also in Step 4 which will result in 0 dividend. |
CAclubindia
