Rule 3-Companies (Declaration and Payment of Dividend) Rules, 2014 | Companies Act Integrated Ready Reckoner|Companies Act 2013|CAIRR (2024)

FAQs

What is the rule 3 of companies declaration and payment of dividend rules 2014? ›

The conditions for the declaration of dividend in case of inadequacy or absence of profits are prescribed in Rule 3 of the Companies (Declaration and Payment of Dividend) Rules, 2014. Rule 3 specifies that in the event of inadequacy or absence of profits in any year, a company may declare dividend out of free reserves.

Rule 3. One Person Company.—(1) Only a natural person who is an Indian citizen and resident in India- (a) shall be eligible to incorporate a One Person Company; (b) shall be a nominee for the sole member of a One Person Company.

Amended Rule 3(1) provides that the books of accounts and other relevant books and papers maintained in an electronic mode should remain accessible in India at all times to be usable for subsequent reference. 'At all times' is the emphasis added to the rule relating to the accessibility of electronic books of accounts.

As per these rules, dividends can be declared, from drawing from the general reserves, in case of absence of profits or inadequacy of profits subject to the following conditions: (a) the rate of dividend declared shall not exceed the average rate of dividend for the last 3 years.

No Dividend should be declared if there is default by company in payment of Dividend of current or previous year(s). Section 127 of the Act deals with penal provisions for the same. However, no specific restriction is placed on declaration of further Dividend.

There are three prerequisites to paying a cash dividend: a decision by the board of directors, sufficient cash, and sufficient retained earnings.

(3) Where a natural person, being member in One Person Company in accordance with this rule becomes a member in another such Company by virtue of his being a nominee in that One Person Company, such person shall meet the eligibility criteria specified in sub rule (2) within a period of one hundred and eighty days.

Section 3 of the Companies Act, 2013: Formation of company

The Companies Act, 2013 Chapter-II Incorporation of Company and Matters Incidental Thereto Section 3: Formation of company.

(3) Subject to the provisions of sub-rule (1), where a company is required to constitute the Audit Committee, the committee shall recommend the name of an individual or a firm as auditor to the Board for consideration and in other cases, the Board shall consider and recommend an individual or a firm as auditor to the ...

(3) No company referred to in sub-section (2) of section 73 shall accept or renew any deposit from its members, if the amount of such deposits together with the amount of other deposits outstanding as on the date of acceptance or renewal of such deposits exceeds twenty five per cent .

What is the accounting rule of 3? ›

The three golden rules of accounting are (1) debit all expenses and losses, credit all incomes and gains, (2) debit the receiver, credit the giver, and (3) debit what comes in, credit what goes out.

- (1) The following class of companies shall be required to appoint an internal auditor 1 [which may be either an individual or a partnership firm or a body corporate], namely:- (a) every listed company; (b) every unlisted public company having- (i) paid up share capital of fifty crore rupees or more during the ...

The amount of dividend shall be deposited in a scheduled bank in separate account within five days. Dividend may be paid by cheque or warrant or in any electronic mode to the shareholders entitled to the payment of dividend. No dividend can be declared in the event of failure to repay the deposits accepted by company.

Payment of dividends are not mandatory; rather, the board of directors may use its discretion to decide whether to invest the company's profits back into the company pay them out in dividends.

(1) A company must not pay a dividend unless: (a) the company's assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend; and (b) the payment of the dividend is fair and reasonable to the company's shareholders as a whole; and (c) the payment ...

Notify the Stockholders

calculate the cash amount to be paid to the shareholders, both individually and in the aggregate. fix a record date for determining the stockholders who will be entitled to receive the dividend (based on the laws of your state)

Final dividends require shareholder approval; interim dividends do not. The company has sufficient funds to pay the dividends. Before paying dividends, the company must have enough cash or liquid assets to cover the payments, and the directors must judge that the payment will not cause cash flow problems.

(1) The company may by ordinary resolution declare dividends, and the directors may decide to pay interim dividends. (2) A dividend must not be declared unless the directors have made a recommendation as to its amount.