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REGISTERED No. D-28

The Gazette of India

EXTRAORDINARY

PUBLISHED BY AUTHORITY

NEW DELHI, FRIDAY, OCTOBER 39, 1948

GOVERNMENT OF INDIA

MINISTRY OP LAW

New Delhi, the. 29th October, 1948

ORDINANCE No. XXIX of 1948

AN

ORDINANCE

, to limit the dividents which may be paid by public companies.

WHEREAS an emergency has arisen which makes it necessary to limit the divi- dends which may be paid by public companies ;

.New, THEREFORE. in exercise of the powers conferred by section 42 of the Government of India Act, 1935 (26 Geo. 5, c. 2), the Governor-General is pleased to make and promulgate the following Ordinance :—

Preliminary

1. Short title, extent and commencement.—(1) This Ordinance may be called the Public companies (Limitation of Dividends) Ordinance, 1948.

{2) It extends to all the Provinces of India, and also to every Acceding State to the extent to which the Dominion Legislature has power to make law fro that State as respects the m a t t e rs dealt with in thin Ordinance.

(.3) It shall come into force at once,

3. Dafinitions.—-In this Ordinance, unless therein anything repugnant in the subject or context,—

(a) " Companies A c t" moans the Indian Companies Act, 1913 (VII of 1913):

(6) "company" means a public company us defined in clause (13A) of section 2 of the Companies Act, and includes—

(i) the Imperial Bank of India constituted under the Imperial .Bank of India Act, 1920 (XLVII of 1920):

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(n) any trading, banking, insurance or finance corporation constituted by or under any other law in force in India, provided that such corpora- tion, if it had been registered as a, company under the Companies At-JL would not have "been a " private company " within the meaning of that Act ; and

(Hi) any other incorporated body which the Central Government may, by general ov special order, declare to be a public company for the purposes of this Ordinanop,

but d"r* not include a co-operative society registered or deemed tu be registered under the Co-operative Societies Act, 1912 (II of 1912), or any other law relating to ""-"perative societies in force for the tim$ being in any part of India ;

(e) "financial year" means th" jear commencing on the lot day of April,

Limitation of dividends

9. Dividends cot to exceed certain limite.—No company shall, after the comm"f"cpmfMit of this Ordinance, distribute as dividend during any finaneial year, any sum which exceeds, or which, when taken with any sum already distributed an dividend during the same year whether before or after the commencement of this Ordinance, will exceed—

(>) Mix per cent, of the paid-up capital of the company as on the M*t day of the peiiod in respect of which the dividend is distributed, after deducting from such capital all amounts attributable to the capitalisation, on nr after (he 1st day of April, 1946, of one or more of the following, namely, n.wrTrp, profits and appreciation of assets, or

(bj the average annual dividend of the company, determined in the martuer

uprv'ifad in sections 5-to 7,

whichever is higher.

4. Limit of six per cent, to be exclusive oi income-tax paid by company.—-

The limit of six per cant, uptcificd in clause (a) of section 3 ahull be applied to the- amount of dividend diatribufted by the company among its shareholders, payment* iii^de by.-{,he company by way of income-tax boing ignored.

' '$. rSlvidends and poriods to bo taken into account for determining average ••' jjjjffriijftl dfoffend.- The average annu.il dividend referred to in clause (ft) of section ' 3'shall'TO determined with reference to—

: •("). the total of the dividends distributed by such company (otherwise , than by way of bonus shares) during the period of two years commencing on ^tie 18* day of April, 1946, and ending with the 31st day of March, 1948, and v t&).,,+b-e total of the periods in respect of which each such dividend hat, been distributed, no period however being counted more than once :

Provided that where an intorim dividend for any period has been distributed before the lm day oi April, 1910, and a final dividend has been distributed in respect of the same poiiod on or after that date but on or before the 31st day of March, 1948, such interim dividend shall be added to ths total of the divi ienls referred to in clause (a) :

Provided further that where an interim dividend for any period has b"ea distributed on or after the. let day of April, 1940 and on or before the 31"t day of Maroh, 1948, and a final dividend has been or is distributed in rwpeot of the same peiiod after the l*tter date, then—

(i) if the final dividend was distributed before the 5th day of October-, 1048, it shall be added to the total of the dividends referred to in clause (a) ;

(ii) if the final dividend was or is distributed on or after the 5th day of October, 1948, the interim dividend and the period in respect of which it was distributed shall not be taken into account for the purposes ef this section ; but it shall be open to the company to claim that the interim divi- dend (but not the final dividend) shall be added to the total of the dividends referred to in clause (a), in whksh case the period in resjs&et of which such interim dividend was distributed shall be taken into account for the purposes of clause (b).

6. Date of distribution of dividend.-—For the purjwses of this Ordinance, a d ividea€ shall be deemed to have been distributed by a company on thedate OH which the shareholders or their legal representatives have a right to receive it from the csmpaay, whether or not it has been actually paid.

7. Provision for increase or reduetion-in paid-up capital,— (2) (a) Wheie, sub- sequent to the distribution by a company of any dividend •which has to be taken into aecoant for the purposes of clause (b) of section 3, its paid-up capita! ic increased fey any amounts actually paid in cash, or

(1) where, before the distribution ofany such dividend, the paid-up capital of a company is increased by any amounts actually paid in cash, but the amount* so paid ar" sot entitled to the benefit of such dividend, such dividend, and every prior dividend which has to be takemnto account for the purposes aforesaid, shall be deemed to have been augmented—

(i) pro rata, if the increase took place before the commencement of tkis Ordinance; and . \

(ii) by a sum equal to six per centum per annum of the amounts paid in cask as aforesaid, if the increase took place after the commencement of this • Ordinance.

(2) (a) Where subsequent to the distribution by a company of any dividend which has to be taken into account for the purposes of clause (b) of section 3, its paid-up capital "is reduced, or

(b) where, before the distribution of any such dividend, the paid-up capital of a. company is reduced, but the whole of the capital as it stood before such reduc- tion is entitled to the benefit of such dividend, such dividend, and every prior dividend vim 1; ITS to be taken into accountffor the purposes afoicsaid, shall be deemed to have been diminished i>rorata.

Preference shares

8. Special provision for preference shares.—Nothing contained in this Ordinance shall be deemed to limit in any way the dividend payable on preference shares is""e"l and subscribed for, before the commencement of this Ordinance.

9. Prohibition of issue of preference shares at more than six per cent.—No company shall, after the commencement of this Ordinance, issue preference shares carrying a right to a dividend at a rate exceeding six per centum per annum.

Miscellaneous

If. Power to make rules.—(1) The Central Government may, by notification in the official Gazette, make rules to carry out the purposes of thfs 0r3inance.

(2) In particular and without prejudice to the generality of the foregoing power such rules may provide for— *

'

(i) the adaptation of the provisions of this Ordinance with a view to tkeir application to all en? any of the bodies declared to be public companies under sub-clause (Hi) of clause (6) of section 2 ;

(ii) the prevention of the evasion of the provisions of this Ordinance, and the removal of difficulties in giving effect thereto.

11. Faw3T t3 make 3X3mpi;ioni, etc.—-The Central Government may, by noti- fication infch'joffi 3lal Gr izsfcie, exempt any company or class of companies from all or any of the provisions of this Ordinance, or make any modification in the appli- cation of the said provisions to any company or class of companies.

12. Penalty.—Any director, managing agent, manager or other officer or em- ployee, of a company who contravenes or attempts to contravene, or abets the contra- vention of or attempt to contravene, any of the provisions relating t.o the distribu- tion of dividends, or the issue of preference shares, contained in this Ordinance or in any rule, notification or order issued thereunder, shall be punishable with im- prisonment for a term which may extend to two years, or with fine, or with both.

C. RAJAGOPALACHART,

Governor- General.

K. Y. BHANDARKAR,

Secy, to the Govt. of Indi't.

PTJBUSHED BY ras MANAGER or PUBLICATIONS, DEIHI, INDIA. PBEKTBD BY THB MANAGER, GOVEBNMENT or INDIA Psssa, NBW Daua, INDIA.