Maharashtra State BoardHSC Commerce 12th Board Exam
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Study the following case/situation and express your opinion : RAJ Company limited decides to pay Interim Dividend Is the Board justified to decide Interim Dividend of ₹ 5/per share - Secretarial Practice

Short Note

Study the following case/situation and express your opinion :

RAJ Company limited decides to pay Interim Dividend

  1. Is the Board justified to decide Interim Dividend of ₹ 5/per share even though profits till date are insufficient?
  2. Can the Board declare it out of Free Reserves?
  3. Can the Board declare it out of Capital?
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Solution

  1. No, the Board is not justified to decide the interim dividend of ₹ 5/- per share if the profits till date are insufficient. This is because the Interim Dividend is declared out of profits.
  2. No, the Board cannot declare interim dividends out of Free Reserves.
  3. No, the Board cannot declare the interim dividend out of capital. It is declared out of profits of the current accounting year.
Concept: Interim Dividend
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APPEARS IN

Balbharati Secretarial Practice 12th Standard HSC Maharashtra State Board
Chapter 10 Dividend and Interest
Exercise | Q 3.3 | Page 156
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