CA Inter P2 · Chapter 7 · Question 6 of 9
Under section 123(6), a company that has failed to comply with the provisions of sections 73 and 74 (acceptance and repayment of deposits) shall not declare dividend on:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Its equity shares, so long as the failure continues
Explanation
Section 123(6) provides that a company that fails to comply with sections 73 and 74 shall not, so long as the failure continues, declare any dividend on its equity shares. The prohibition protects depositors by stopping profits being paid out while deposits remain in default.
More Declaration and Payment of Dividend MCQs
- Q8Under the provisos to section 123(1), before declaring dividend for the current financial year a company must:
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- Q1Which of the following can be a source of dividend under section 123(1)?
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- Q3A dividend declared by Sapphire Ltd has not been paid or claimed within thirty days of declaration. Under section 124(1), the unpaid…