Section 123 - Declaration of dividend

Dividend declaration rules restrict payments to profits after depreciation, limit interim dividends, and require bank deposit and registered-payee payment.

Dividend may be declared only from current-year profits after depreciation, undistributed prior-year profits after depreciation, or government-provided funds under guarantee, excluding unrealised or notional gains and revaluation increases; depreciation must follow Schedule II. Companies may transfer profits to reserves before declaration, must set off prior losses and unprovided depreciation, and may declare interim dividends subject to limits where recent losses exist. Declared dividends must be deposited in a separate scheduled bank account within five days and are payable only to the registered shareholder or their order in cash or permitted electronic modes; failure to comply with sections 73 and 74 prohibits dividend declaration.