Dear Members,
Kindly advise on the following:
In a closely held private limited company, the company has made provision for proposed dividend (25%) in the audited accounts. In the AGM, the company included the declaration of dividend in their agenda & the subsequently the item has also been approved by the members (only 2 in this case).
The company has not paid the dividend amount to the shareholders as their bankers objected to this payment of dividend. As per the loan agreement entered into between the banker & the company, the company has to get prior approval from the banker for declaration of dividend etc. The company has not informed the banker before declaring this dividend.
The company has not paid the dividend to the shareholders and has not transferred the amount to the dividend account within the time. Can the company reverse the provision made for proposed dividend. What is the course of action to be taken by the company. Kindly provide the relevant provisions.
I request all the learned members of this forum to share your views.
Thanks and regards
R. Jalaja
CAclubindia
