Today we have discussed some important sections of Companies Act,2013, Like DIVIDEND, SECURITIES PREMIUM, BONUS SHARES. All Companies must have to follow provision wise rules related with these sections.

DIVIDEND (Section 123 to 127)

Dividend allowed out of profits for the year or accumulated profits or both.

 Depreciation to be provided in both cases as per Schedule II

 No provision to declare dividend without providing for full depreciation

 Transfer to reserves at option of company

 Interim dividend can be declared out of CY profits or PL surplus

 If loss in the current FY up to the end of earlier quarter when interim dividend is declared – rate cannot exceed average of last 3 yrs.

 Draft rules issued for dividend out of reserves

 Rate not to exceed average rate for last 3 years, etc.

No dividend to be declared if company fails to comply with provisions related to acceptance and repayment of deposits

 Transfer to IEPF for Unpaid Dividend:

 Along with unpaid / unclaimed dividend, company ready to transfer all the shares on which dividend has remained unpaid /unclaimed to the Investor Education and Protection Fund (IEPF)

As per draft rules transfer of shares not required for shares held in demate form and dividend encashed for any 1 out of 7 years

Claimant of shares transferred as above entitled to claim from IEPF as per laid down procedures  


Securities premium to be applied for permitted purposes

 Utilization of securities premium for any other purpose would entail compliance with provisions relating to reduction of capital

 For classes of companies to be prescribed in the Rules, utilization of securities premium for the following purposes will require such a company to ensure that the AS prescribed have been complied:

  • Issue of bonus equity shares
  • Writing off the expenses of or the commission paid on any issue of equity shares
  • Buy-back of shares or other securities

BONUS SHARE (Section 63)

Fully paid Bonus shares can be issued out of :

  • Free reserves o Securities premium account or
  • Capital Redemption Reserve No bonus shares out of reserves created by revaluation of assets Bonus shares can be issued only if
  • Authorised by AOA and approved in general meeting
  • No default in payment of interest and principal in respect of fixed deposits or debt securities issued
  • No default in payment of statutory dues of employees
  • Once announced, decision cannot be reversed (draft rules)
CS Seema Bansal

CS Seema Bansal having experience of two years under CS firm and also having degree of B. Com and M. Com. Having expert knowledge of ROC related work and other company related compliances with MCA.

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