CMA Final · Corporate and Economic Laws · Dividends
Under the Companies Act, 2013, a company may pay dividends in proportion to the amount paid-up on each share if:
A company may pay dividend in proportion to the amount paid-up on each share only if its articles authorise it. The authority comes from the articles, not from a Board resolution, a profit history or any permission from the Registrar.
- Athe Board passes a resolution at any meeting
- Bthe company is authorised to do so by its articlesCorrect
- Cthe company has earned profits in the preceding three years
- Dthe Registrar grants prior permission
Explanation
Section 51 provides that a company may, if so authorised by its articles, pay dividends in proportion to the amount paid-up on each share. A Board resolution or Registrar permission is not the stated requirement, and no three-year profit condition appears in that section.
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