Rule 3 of companies payment of dividends rule states that where the profits are inadequate, Dividends can be paid from free reserves however the rate of dividends not to exceed average of proceeding three years dividend, incase the company has not declared any dividend ineach of the three year, this sub clause is not applicable to the company. So my question is then do we consider the other clauses or we consider no dividend to be declared since average rate would be zero.
ANSWERED Ravi answered March 25, 2019     Category:
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 Sir The way you exolained the treatment of losses only current year out of reserves seems practical and reasonable. But sir if we follow that then Sec123wil be contravened which says before declaring any dividend set off all previouscyear losses. What is final conclusion that we have to follow for exams. Sir if you have any clarification or practical sum which shows how ICAI approaches the sum and please give the final conclusion
ANSWERED Ravi answered October 11, 2018     Category:
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