dividends distributed in a year of loss

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'.

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

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.


 

Dear mahalaxmi, you cannot declare dividend in absence of free reserves so there is no question of rate