Hi guys,
I am registering a Pvt ltd company next week.... There are 3 directors including me and we 3 are shareholders as well....... All the 3 directors including me will be on salary basis...... i would like to know if i can issue dividends on monthly basis as well.....
In my view there is no restriction on number of times a Company can pay interim dividend. You can pay dividend every month but after complying all the applicable sections of Companies Act, 1956 with regard to dividend payment and Companies (Declaration of Dividend out of Reserves) Rules, 1975.
Its difficult to pay dividend every month especially for a newly incorporated Company, as there is inadequacy of Profits and Company is also require to transfer specified amount to reserves of the Company.
Agree with the views of Ms. Smriti...
Between the closure of financial years the Board of Directors may declare Intirim dividend as they may deemed fit and proper depending upon the financial position of the Company.
As i think, you are doing so as the income from dividend is exempted in the hands of shareholder, however, it is taxed twice on the Company. First on the income of Company secondly on the distributed profit that too 16.2225% therefore, it would be loss for the Company.
However, remuneration will be allowable expenses and the remaining income shall be taxable for the Company. And as such all the income is yours, as you are the director and the shareholders therefore, this giving remuneration will be beneficial for your goodselves.
thank you so much for your valuable advice..... ill see ito it that the renumeration to the directors is a bit increased.... and also can you guys advice me how to declare dividends when the profit of the company for example is 1,00,000/- and the shares ratio between the directors is 30%, 30% and 40%.....
CAclubindia
