The Board of Directors of XYZ Limited company proposes to declare dividend at the rate of 25 to equi...........

Companies Act-Phase (I & II) Paymentofdividends

The Board of Directors of XYZ Limited company proposes to declare dividend at the rate of 25% to equity shareholders, despite the fact that the company has defaulted in repayment of public deposit accepted before commencement of Companies Act. Is it Valid?

Yes, dividend proposed by BODs is valid

No, Dividend proposed by BODs is not valid

BODs can propose the dividend with the permission of ROC

BODs can propose the dividend with the permission of Regional Director

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Explanation:

Section 123(6) of the Companies Act, 2013 specifically provides that a company which fails to comply with the provisions of Section 73 and section 74 Companies (Acceptance of Deposit) Rules, 2014 shall not so long as failure continues, declare any dividend on its equity shares. Accordingly, the declaration of dividend by XYZ Limited is not valid.