CMA Final · Corporate and Economic Laws · Dividends
Under the Companies Act, 2013, a company limited by shares may pay dividends in proportion to the amount paid-up on each share, provided that:
A company may pay dividends in proportion to the amount paid-up on each share only if its articles authorise this. Neither Registrar approval nor Tribunal sanction is needed, and the shares need not be fully paid-up for the provision to apply.
- AThe articles of the company authorise it to do soCorrect
- BThe Registrar of Companies has granted prior approval
- CThe shares are fully paid-up at the time of declaration
- DThe Tribunal has sanctioned such a distribution
Explanation
Section 51 permits a company, if so authorised by its articles, to pay dividends in proportion to the amount paid-up on each share. No approval of the Registrar or Tribunal is required, and the shares need not be fully paid-up, because the provision exists precisely for partly paid shares.
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