Payment of dividend section 123 sub- section 5

Co Act 2013 502 views 2 replies

khalid rabbani

Student

32 Points Joined May 2010

hi,

i didn't understand the meaning of this following sentence from the excerpts of section 123 sub-section 5:

Provided that nothing in this sub-section shall be deemed to prohibit the capitalisation

of profits or reserves of a company for the purpose of issuing fully paid-up bonus shares or

paying up any amount for the time being unpaid on any shares held by the members of the

company:

Replies (2)

Manish Sadhnani

Chartered Accountant

35 Points Joined June 2013

Section 123 relates to Provision of Dividend, and sub- section (5) Indicates Dividend shall not be payable by any other mode Except Cash.
Provison to this sub-section also includes that cash may include payment by way of cheque or warrant or any other Electronic mode to such Registered Shareholder.

Another Provisio to which your Query Relates, indirectly means that section 123 will not be applicable to Issue of Fully paid Bonus shares or Giving Bonus in form of Converting Partly Paid up shares into Fully paid up shares.
Therefore Provisions of section 123 are not applicable to issue of Bonus, where Reserves are capitalized or paying up Unpaid Amount of Partly Paid up shares for shareholders in form of Bonus.