Dividend out of reserves

Hi All

As per Declaration of Dividend out of reserves Rules 1975


2. Declaration of Dividend out of Reserves.-
In the event of inadequacy or absence of profits in any year, dividend may be declared by a company for that year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, subject to the conditions that-
(i)
the rate of the dividend declared shall not exceed the average of the rates at which dividend was declared by it in the five years immediately preceding that year or ten per cent of its paid-up capital, whichever is less;

 My query is that In case the Co. has not declaraed in the last five years, what would be the maxi rate of dividend?

Replies (2)

Dear friends,

If the co has not declear any dividend during the period of five year & it has loss in the current p/y then it can declear any amount as dividend out of its accumulated profits but it can not declear any amount as dividend out of its reserve.

 

thanking you

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