Dividends Declaration of Transfer to reserves of certain percentage of profits Queries arising from the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975

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..... dends ‑ Declaration of ‑ Transfer to reserves of certain percentage of profits ‑ Queries arising from the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 answered Query: Section 205(2A) provides that "Notwithstanding anything contained in sub‑section (1), on and from the commencement of the Com .....

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..... te a higher "percentage" of profits to be transferred to reserve. Such a transfer of a higher amount would be in accordance with a sound financial policy. The intention of the proviso could only be that a "lower" percentage may be transferred to reserve funds in accordance with rules to be made by the Central Government to provide for cases of hardship. Following this "error" in the proviso, now t .....

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..... ng voluntary transfer of "higher" percentage (i.e., higher than 10 per cent of the profits) to the "reserve" should be repealed. Answer: The matter has been examined. The contention of the chamber that the word "higher" used in proviso to section 205(2A) was a mistake is not correct. It is only an enabling provision to transfer voluntarily a higher percentage of profits to the reserves subject of .....

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