Before declaration of Dividend company shall setoff losses of current financial year from free reserves.
or previous year losses also????
I think current financial year losses only.
Please confirm whether my understanding is correct....
Thank you
Fourth proviso to section 123(1)(b) provides that --
"no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year"
Earlier the same proviso was given as sub rule (5) to rule 3 of declaration and payment of dividend rules. The same was omitted from rules and inserted as proviso to section 123 (1)(b).
So as far as I've understood the law remains same i.e.
No company can pay dividends without setting off all previous brought forward losses and depreciation.
CAclubindia
