If dividend is being declared out of free reserves, can it be declared if no dividend is declared in the last 3 Financial years?

Questions › Category: CA-Final Dividend › If dividend is being declared out of free reserves, can it be declared if no dividend is declared in the last 3 Financial years?

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Sarvesh Koushik asked 6 years ago

Also what will be the rate if dividend is declared only for 1 year in the previous 3 years?

Question Tags: Sec 123

3 Answers

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Ravi Staff answered 6 years ago

If no dividend is declared in past 3 years, then we have to ignore condition of average dividend rate, that means no need to calculate average and stick to it
if dividend is given in 2 years take average of 2 years as rule says take average of announced dividend rates
if it is announced in one year take that as average, “no need” to do (0+0+x) / 3

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Sarvesh Koushik answered 6 years ago

And if no dividend is declared in any of the previous 3 years. Then is company allowed to declare dividend?

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Ravi Staff answered 6 years ago

Yes it is written on rules that then this condition of average dividend will not be applicable