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dividends distributed in a year of loss

Mahalakshmi Sermadurai (6 Points)

10 December 2018

in case of no free reserves in pvt company then what will be the maximum dividends payable for that year of loss ??

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9 Replies

Shazia Haque (15 Points)
Replied 10 December 2018

rate of dividend shall not exceed average rate dividend of last 3 financial year

Mahalakshmi Sermadurai (6 Points)
Replied 10 December 2018

third condition doesn't satisfy ,least of the following will be consider then without free reserves how should we calculate...

Shazia Haque (15 Points)
Replied 10 December 2018

if no free reserves then don't declare dividend

Shrikant (Associate) (350 Points)
Replied 11 December 2018

Please check company has 'Free Reserves' and not other reserves as in case of inadequacy or absence of profits, a company may declare dividends out of its 'Free Reserves'.

Shazia Haque (15 Points)
Replied 11 December 2018

mr. shrikant he says if in a co. there is no free reserves then how should they calculate the rate of dividend.

Shrikant (Associate) (350 Points)
Replied 11 December 2018

ohh sorry, read the query in the other way. Thanks @ Shazia.

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Shrikant (Associate) (350 Points)
Replied 11 December 2018

Here. as per third proviso to the section 123 (1) of the CA2013, Company may declare dividends out of its 'Free Reserves' and from not other reserves.

Now Rate of dividend shall not exceed average rate dividend of last 3 financial year will be applicable in case of inadequacy or absence of profits to the Company.

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