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SYJC - Secretarial Practice
Digital Guide
Chapter 10 - Dividend and Interest (Page 155, Question 3)

Q.3 Study the following case/situation and express your opinion. (3 marks each)
(1) LMN Co. Ltd. decides to declare dividend for the financial year 2018-19 in which it has earned profits less than their expectations.
(a) Is Board right in recommending a dividend of Rs.5 per share out of free reserves?
(b) Can Board declare the dividend though it is not approved by AGM?
(c) Can the Board give dividend in the form of gifts?

(2) ABC Co. Ltd. decides to pay Interim Dividend.
(a) Can it be paid out of free reserves?
(b) Is the Board right in declaring the same at the Board Meeting?
(c) Can the company distribute the same within 30 days of its declaration?

(3) RAJ Company Ltd. decides to pay Interim Dividend.
(a) Is the Board justified to decide Interim Dividend of Rs.5 per share even though profits till date are insufficient?
(b) Can the Board declare it out of Free Reserves?
(c) Can the Board declare it out of capital?

(4) DIAMOND Co. Ltd. is considering to declare Interim Dividend.
(a) In how many days of declaration it should transfer the funds to Dividend Account?
(b) In how many days it must pay it to shareholders?
(c) In how many days of declaration it must transfer the funds to the Unpaid Dividend A/c?

(5) The Board of Directors of STAR Co. Ltd. which is a listed company recommends a dividend of Rs.15 per share to be paid in cash.
(a) Is it justified to pay the dividend firstly to its Preference Shareholders and thereafter to Equity Shareholders?
(b) Is the AGM required to approve the same?
(c) Can the company pay dividend in cash?

(6) GOLD Co. Ltd. declares a dividend of Rs.10 per share for F.Y. 2018-19.
(a) Is company under default, if dividend was not paid within 30 days of its declaration?
(b) Is company right in transferring the unpaid dividend to its Debenture Reserve Account?
(c) Does the company have to transfer the amount of unpaid dividend to IEPF after 30 days?