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Plz help

28 October 2009

Surplus on the re-issue of forfeited shares standing to the credit of share forfeited account can be distributed as DIVIDEND. ??

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12 Replies

Punit Tibrewal (student ) (1684 Points)
Replied 28 October 2009

no..profit on re-issue of shares is a capital profit..!

FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 28 October 2009

Dear Faiyaz,

Surplus on re-issue of shares is transferred to capital reserve.

Capital reserve is a reserve of a corporate enterprise which cannot be used for distribution of profit.

Sandeep Pandey (CA FINAL) (1306 Points)
Replied 28 October 2009

I agree with Kajri........................

CA FaIyaZ PaTrAwaLa (CA) (276 Points)
Replied 28 October 2009

Dear Kajri According to sec 205 of the co. Act does not make distinction between Capital Profit N other profit accordng 2 lubok vs british bank of south America Capital profit can distributed as dividend if the following condition are satisfied The AOA permits The capital profit actually realised in cash Capital profit should remain after proper valuation Now wat u say?

1 Like

Sushil (CA Final Student) (2571 Points)
Replied 28 October 2009

no.....its a capital profit.

sumit (CHARTERED ACCOUNTANT) (479 Points)
Replied 28 October 2009

it can be distributed

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 28 October 2009

even i go wid other members...

it cannot be used

(Guest)

Originally posted by :KAJRI
"	Dear Faiyaz, Surplus on re-issue of shares is transferred to capital reserve. Capital reserve is a reserve of a corporate enterprise which cannot be used for distribution of profit.	"

it's right

The Harshit Aggarwal (B.Com(H) ,CS Final) (5278 Points)
Replied 28 October 2009

Me too agree with Kajri and other frnds.,

it can't be distributed

(Guest)

CA MOHIT GUPTA (PRACTICE) (49 Points)
Replied 29 October 2009

Dear All,

As per the provision of Companies Act, 1956 the amount remaining to the credit of Share Forfieted A/c after applying for discount on re-issue must be transferred to Capital Reserve A/c. So it can not be used for Divivdend Distribution because Capital Reserve A/c have restricted use and only Free reserves can be used for distribution of dividends.

Thanx

CA Rahul Jain (CA) (1162 Points)
Replied 03 November 2009

hi guys

all the views expressed above r correct to some extent. but as per the case cited above, amount remaining to the credit of share forfieted a/c can be used to distribute the dividend.