If a company wants to declare dividend out of accumulated profits/reserves, such dividend shall not be made except in accordance with such rules as may be prescribed in this behalf. As per the exemption these rules shall not apply to a Gov Company. So, does it means that Gov company can't declare dividend out of accumulated profit ??
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Dividend by gov company
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Yes as per notification dated 05/06/2015, companies that are wholly owned by CG/SG will not be able to declare dividends out of free reserves.
Proviso 2 to Sec 123 states that companies can declare dividends out of free reserves in accordance with the conditions laid down in Rule 3 (Dividend Rules). After the amendment this proviso is not applicable to 100% owned govt companies.
However, I am not sure about whether these (100% owened govt) companies can declare dividends out of accumulated profits which were not transfered to any reserve, i.e. balance in P&L account which has been carried from previous years.
Since the amendment only related to the proviso regarding reserves, I think these companies can still declare dividends of out balances carried in P&L account which was not transfered to any other reserve.
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