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CA Intermediate · Corporate and Other Laws · Declaration and Payment of Dividend

The board of Tapovan Steels Ltd. wishes to pay an interim dividend during the financial year. Which statement correctly describes the legal position under the Companies Act, 2013?

The Board of Directors may declare an interim dividend, during any financial year or between the close of the year and the AGM. It does not need a general meeting or Central Government approval, and it must come from permitted sources such as profits, not securities premium.

  1. AOnly the shareholders at a general meeting can declare an interim dividend
  2. BThe Board may declare an interim dividend during any financial year or at any time during the period from closing of the year until the AGMCorrect
  3. CAn interim dividend can be declared only with Central Government approval
  4. DAn interim dividend must be declared only out of securities premium

Explanation

The Board of Directors may declare interim dividend during any financial year or in the period from the close of the year to the holding of the AGM, out of the surplus in the profit and loss account and profits of the financial year. General meeting declaration is for final dividend. Government approval and securities premium are irrelevant.

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