Gurpreet Singh MehtaGurpreet Singh Mehta asked 2 years ago

Plz answer the following queries
1.Can shareholders pass resolution in AGM to declare dividend higher or lesser than recommendation of board?
2. As per exemption to govt company vide notification 463E dated 5.4.15 from rule 3 of companies (dividend payments and declaration )rules r.w. 2nd proviso to sec 123(1) ,Can Government company declare dividend out of accumulated profits when current year profits are not sufficient? How it shall be interpreted? That as per exemption, government co. need not to fulfill conditions of rule 3 or to government co. Rule 3 does not apply, hence cannot declare dividend in such case

1 Answers
RaviRavi Staff answered 2 years ago

1. Shareholders can declare same dividend as proposed or reduce it but they cannot increase it
2.Rules Shall not apply to a Government Company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments. (That means they can pay dividend without any restrictions, there has been little controversy as RTP misinterpreted this amendment, that such companies cannot pay dividend out of general reserve, I don’t agree with it)

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