Dividends ‑ Declaration of ‑ Transfer to reserves of certain percentage of profits ‑ Queries arising from the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975

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..... dated 12 ‑ 3 ‑ 1976. Subject:-Dividends ‑ Declaration of ‑ Transfer to reserves of certain percentage of profits ‑ Queries arising from the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 answered Query: Section 205(2A) provides that Notwithstanding anything conta .....

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..... take because no legislation should or could possibly prohibit or regulate a higher percentage of profits to be transferred to reserve. Such a transfer of a higher amount would be in accordance with a sound financial policy. The intention of the proviso could only be that a lower percentage may be transferred to reserve funds in accordance with rules to be made by the Central Government to prov .....

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..... igher by the word lower and the rules prescribing conditions governing voluntary transfer of higher percentage (i.e., higher than 10 per cent of the profits) to the reserve should be repealed. Answer: The matter has been examined. The contention of the chamber that the word higher used in proviso to section 205(2A) was a mistake is not correct. It is only an enabling provision to tran .....

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