YEAR’S SECOND AMENDMENT IN DIVIDEND RULES


The Ministry of Corporate Affairs placed here on its website a draft of the Companies (Declaration and Payment of dividend) Second Amendment Rules, 2015. These amendment Rules will come into force from the date of its publication in Official Gazette.

These amendment rules proposed to omit Rule 3(5) of the Companies (Declaration and Payment of dividend) Rules, 2014.

The Deleted Rule 3(5) read as under,

“No company shall declare dividend unless carried over previous losses and depreciation not provided in previous year are set off against profit of the company of the current year the loss or depreciation, whichever is less, in previous years is set off against the profit of the company for the year for which dividend is declared or paid.”

This amendment in the Rules is in alignment with the Companies (Amendment) Act, 2015 relevant part of which came into effect from 29th May 2015. Section 10 of the Amendment Act amends Section 123(1) of the Companies Act, 2013 by inserting following proviso:

“Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.”

After this amendment in Section 123(1) of the Companies Act, 2013 there is no requirement of Rule 3(5).

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

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5 responses to “YEAR’S SECOND AMENDMENT IN DIVIDEND RULES

  1. Pingback: Index of Companies Law Posts | AishMGhrana

  2. Shaurya Nijhawan

    Hmm.. If you are trying to ask what is the role of Rules in an Act – I think, that Rules are there to describe procedures and “additional conditions” to be complied with while carrying out the provisions of the Act.

    Now, ‘all legal provisions are in Rules’ is a vague generalization of what I am asking.

    To rephrase my question:
    Have you come across a similar situation in past wherein a provision was transferred from Rules to Act?

    Like

  3. Shaurya Nijhawan

    http://mca.gov.in/Ministry/pdf/Notification_13062014_1.pdf
    Please read this. The deleted Rule 3(5) was amended before being deleted.

    Also, can you tell why is it that this provision has been transferred from Rules to the main Act?

    Thanks & Regards,
    Shaurya

    Like

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