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Question
State the legal provisions regarding declaration of dividend.
Solution
- Regulation 85 of Table A provides that the company may declare dividend in its general meeting.
- The rate of dividend shall not exceed the rate recommended by the Board of Directors.
- When the company fails to redeem redeemable preference shares within the specified period, company shall not declare any dividend on its equity shares, so long as such failure continues.
- The company cannot declare dividends for past years in respect of which accounts are closed at previous annual general meeting.
- The company cannot declare further dividend after declaration of dividend at Annual General Meeting.
- The dividend once declared cannot be revoked (cancelled).
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Declaration of Dividend and Payment of Dividend
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