Declaration of final dividend - before closure of accounts

[Adoni Raghavendra]

Dear All, Whether a 'Private Limited Company' can declare final dividend before the closure/finalisation of accounts related to the period during on which dividend declared? Is it allowed/applicable in/as per the company's Act 1956. If not, what are the consequences to be faced by the company as per the law?

AI Summary

Private companies can declare dividends before finalizing accounts under Section 205, but AGM/EGM approval is required. A query was raised regarding whether a private limited company can declare a final dividend before finalizing accounts for the relevant period, as per the Companies Act 1956. The response clarified that Section 205 of the Act allows for the declaration of dividends before account finalization. However, the final dividend must be approved by the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM). The board can declare an interim dividend, but adjustments for depreciation and accumulated losses must be made before declaring the final dividend.