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COMPANIES (DECLARATION OF DIVIDEND OUT OF RESERVES) RULES, 1975
COMPANIES (DECLARATION OF DIVIDEND OUT OF RESERVES) RULES, 1975
Preamble - COMPANIES (DECLARATION OF DIVIDEND OUT OF RESERVES) RULES, 1975
COMPANIES (DECLARATION OF DIVIDEND OUT OF RESERVES) RULES, 1975
PREAMBLE
In exercise of the powers conferred by sub-section (3) of section 205A, read with clause (a) of sub-section (1) of section 642, of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules, namely:--
Rule 1 - Short title
1These rules may be called the Companies (Declaration of Dividend out of Reserves) Rules, 1975.
In the event of inadequacy or absence of profits in any year, dividend may be declared by a company for that year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, subject to the conditions that?
(i) the rate of the dividend declared shall not exceed the average of the rates at which dividend was declared by it in the five years immediately preceding that year or ten per cent of its paid-up capital, whichever is less;
(ii) the total amount to be drawn from the accumulated profits earned in previous years and transferred to the reserves shall not exceed an amount equal toone-tenth of the sum of its paid-up capital and free reserves and the amount so drawn shall first be utilised to set off the losses incurred in the financial year before any dividend in respect of reference or equity shares is declared; and
(iii) the balance of reserves after such drawal shall not fall below fifteen per cent of its paid-up share capital.
1[(iv) - The Forms prescribed in these rules may be filed through electronic media or through any other computer readable media as referred under section 610A of the Companies Act, 1956 (1 of 1956).
(v) The electronic-form shall be authenticated by the authorized signatories using digital signatures, as defined under the Information Technology Act, 2000 (21 of 2000).
(vi) The Forms prescribed in these rules, when filed in physical form, may be authenticated by authorized signatory by affixing his signature manually.]
Explanation : For the purposes of this rule, "profits earned by a company in previous years and transferred by it to the reserves" shall mean the total amount of net profits after tax, transferred to reserves as at the beginning of the year for which the dividend is to be declared; and in computing the said amount, the appropriations outof the amount transferred from the Development Rebate Reserve [at the expiry of the period specified under the Income-tax Act, 1961 (43 of 1961)] shall be included and all items of Capital Reserves including reserves created by revaluation of assets shall be excluded.
Form - FORM
FORM
1[Form of application for approval for declaration of dividend out of reserves
[Pursuant to section 205A(3) of the Companies Act, 1956 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975]
Note - All fields marked in * are to be mandatorily filled.
1 (a). *Corporate identity number (CIN) of company
(b). Global location number (GLN) of company
2 (a). Name of the company
(b). Address of the registered office of the company
3. * Capital structure (rupees in thousands)
(i) *Paid-up capital.
(ii) Reserve and surplus
(a) *Free reserves
(b) *Other reserves
4. Indicate the rate and amount of proposed dividend and how it meets the condition(s) mentioned in the rule 2 of the Companies (Declaration of Dividend out of Reserves) Rules, 1975
(a) * Proposal of the company
(b) *Rate of proposed dividend
(c) *Amount of proposed dividend
(d) *Conditions for the non-compliance of which the application is being made
5. Justification for the proposal
(a) When the company is in loss
(b) When the profit is inadequate for declaring dividend at the proposed rate
6.* Amount of profits for the current year and the amount proposed to be withdrawn from the general reserves
(a) Amount proposed to be utilised
(b) Amount proposed to be withdrawn
Attachments
1. *No objection letter from the company's lead financial institution
2. "Copy of board of directors resolution in support of the company's proposal
3. Optional attachment(s) - if any
List of attachments
Declaration
To the best of my knowledge and belief, the information given in this application and its attachments is correct and complete
I have been authorised by the board of directors' resolution dated
(DD/MM/YYYY)
to sign and submit this application
To be digitally signed by
Managing director or director or manager or secretary of the company
Certificate
It is hereby certified that I have verified the above particulars from the books of account and records of
M/s
and found them to be true and correct
To be digitally signed by
Chartered accountant or cost accountant or company secretary (in whole-time practice)