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Dividend distribution in Private company


Ca SKG

2014-04-11

Please answer the following questions:

 

1. In a private limited company how dividend shall be declared?

2. What is Tax rate of DDT and when shall be paid?

3. Is there any formalities to file with ROC?

4. How much amount of dividend can be declared?

5. Situations:

a. Company has 5 crore Reserve & Surplus as on 31.03.2013 and profit for the year 13-14 Rs. 80,00,000

b. same as above but in year 13-14 Loss of Rs. 80,00,000

In above cases company's intention is going concern.

What if Company want to close the bussiness.

 

Reply to the answer correctly do not attempt simply such clause is not there you can reply based on your thinking and/or knowledge.

Ankit Sharma

2014-04-11

Before declaring dividend every company is required to transfer certain percentage of profit, as prescribed, to reserve.

It can declare dividend-

a. If, company is/has also issuing/issued bonus, then rate of dividend declarde should not be less than average rate     of dividend declared in 3 consecutive preceding year.

b. If company is/has not issuing/issued bonus then amount of dividend declared should not be less than average amount of dividend declared in 3 consecutive preceding year.

c. But, if profit of the year in which dividend is to be declared, is less than profit of 2 consecutive preceding yaer, then company need not comply with clause a & b mentioned above, and it can go with dividend distribution.

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