Dividend

CS Pooja (Company Secretary) (305 Points)

21 April 2011  

ABC Limited is Closely held Pub Co. having paid up capital of Rs. 20 Crs. wish to declare dividend of Rs. 6 Crores in May on the basis of Audited Balance sheet of 10-11.

Following are the queries:

1.   Whether it will be a Interim Dividend/ Final Dividend.

 

2.   Review by Audit Committee whether compulsory.-Secretarial Standard

 

3.   Is there any formula for calculation of Dividend? How much profit will be approximately required to pay above mentioned amount of dividend.

 

4.   If current years profits are insufficient to pay the said amount of dividend then can the dividend be paid partly out of current profit and partly out of accumulated profits? There is no GR. What is definition of Free Reserves?

 

5.   If it is Interim Dividend then is there any restriction of the Companies Act/Secretarial Standard to pay dividend out of Reserves.

 

6.   Opening of Separate Dividend A/c is compulsory / or current a/c can be treated as ‘Dividend A/c’ by passing Board Resolution \.

 

7.   Whether TDS has to be deducted from the amount of Dividend.

 

8.   There are newly issued shares on 15th March 2010.  Whether these shares will be eligible for dividend? If yes then whether proportionate or at par with existing shares?-Secretarial Standard 5.6 (Resolution for newly issued shares contain the provision that the shares shall rank parri passu with the existing shares)

 

9.   If rate of dividend is less than 10% then whether it is necessary to Transfer to Reserves?

 

110.  Whether it is compulsory to set of Previous Losses/ previous Depreciation?

 

Provisions of the Act: In case a company has incurred loss in any previous financial year or years, the amount of loss or an amount which is equal to the amount provided for depreciation for that previous financial year or those previous financial years, whichever is less, shall be set off against the profit of the company for the year for which Dividend is proposed to be declared or paid.

 

What is the Interpretation of the above provisions?

 

111.  If it is closely held Pub Co then whether provisions relating to ‘Record Date’ and ‘Book Closure’ are applicable?

 

112.  If the Dividend is declared in May 11 then whether it will be Dividend for FY 10-11 or 11-12?

 

113.  If it is Interim Dividend then whether ‘Regularization of Dividend is required in ensuing AGM?

 Regards,

Pooja