The Gazette of India
EXTRAORDINARY
PART II—Section 3—Sub-section (i)
PUBLISHED BY AUTHORITY
No. 211 ] NEW DELHI, SATURDAY, JULY 26, 1975/SRAVANA 4, 1897
Separate paging is given to this Part in order that it may be filed
as a separate compilation
MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS
(Department of Company Affaire)
NOTIFICATION
New Delhi, the 24th July 1975
G.S.R. 427(E).—In exercise of the powers conferred by sub-section (3) of Section 205A, read with clause (a) of sub-section (I) of Section 642, of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules namely :—
1. Short title.—These rules may be called the Companies (Declaration of Dividend out of Reserves) Rules, 1975.
2. Declaration of Dividend out of Reserves.—In the event of inadequacy or absence of profits in any year, dividend may be declared by a company for that year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, subject to the conditions that—
(i) the rate of the dividend declared shall not exceed the average of the rates at which dividend was declared by it in the five years immediately preceding that year or ten per cent of its paid up capital, whichever is less;
I678 THE GAZETTE OF INDIA EXTRAORDINARY [t"A*T II—Sue. 3(1)]Explanation.—For the purposes of this rule, "profits; earned by a company in previous years and transferred by it to tho reserves" shall mean the tottil amount of net profits after tax, transferred to reserves as at the beginning of the year for which the dividend is to be declared; and in computing the said amount, the appropriations out of the amount transferred from the Development Rebate Reserve [at the expiry of the period, specified under the Income-tax Act, 1961 (43 of 1961)] shall be included and all items of Capital Reserves including reserves created by revaluation of assets shall be excluded.
[No. F. 12/34/69-CL-V]
P. B. MENON, Jt. Secy.