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of <h1>Companies Must Report Proposed Dividends as Liabilities per Schedule VI, Companies Act; Auditors to Ensure Compliance.</h1> The circular addresses the statutory obligation for companies to provide for proposed dividends in their profit and loss accounts and to report these under 'Current liabilities and provisions' in the balance sheet. This obligation arises from several requirements, including Schedule VI of the Companies Act and related rules. Failure to comply is considered a contravention, potentially leading to penal action against directors and officers as per section 211. Auditors must report such contraventions in their reports, or they risk proceedings under the Chartered Accountants Act. The dividend becomes a liability only upon shareholder approval at the annual general meeting.
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