Interim dividend mcq

Corporate & Other Laws

Mam ,can interim dividend be declared out of previous years undistributed profits Or Only out of current year profits in which interim dividend is declared Please answer this question

Sudheendra Sumukhi

CA Inter

★ 4K+

13-Nov-21 19:05

958

Answers (4)

Generally out of current profits. There is no specific provision in the act which restricts interim dividend as the act defines dividend to include interim dividend. ICSI guidelines prescribe that interim dividend is to be declared out of current profits only.

CA Suraj Lakhotia

Admin

14-Nov-21 15:27

Sir ,then in that mcq Both options (a) and (d) are correct (A) Interim dividend should be declared out of current year profits only and (D) dividend should be deposited in scheduled bank only

poolukonda Lokeish

CA Inter

★ 61K+

14-Nov-21 15:33

poolukonda Lokeish

Sir ,then in that mcq Both options (a) and (d) are correct (A) Interim dividend should be declared out of current year profits only and (D) dividend should be deposited in scheduled bank only

Sec 123(3) says interim dividend is declared 1. out of surplus in the profit and loss account or 2. out of profits of the financial year for which such interim dividend is sought to be declared or 3. out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend So, past undistributed profits can be used. As for whether Free reserves can be used, both views are possible. In the mcq above, you should go with option (d)

Sahibdeep Singh

CA Inter

★ 14K+

15-Nov-21 11:44

dividend can be paid out of current year profits as well as out of the profits of the previous financial years which has not been transferred to the reserves

Subash Chandrabose

CA Final

★ 32K+

16-Nov-21 05:16