Dividend treatment of debentures and bonus shares to preference shareholders applies only to the extent of accumulated profits. Distribution by a company to its shareholders of debentures, debenture-stock or deposit certificates, with or without interest, is treated as dividend to the extent of accumulated profits, whether capitalised or not. The provision also covers bonus shares issued to preference shareholders, and the deeming fiction applies only up to the amount of accumulated profits existing at the date of distribution or payment. Accumulated profits include all profits of the company up to that date.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Dividend treatment of debentures and bonus shares to preference shareholders applies only to the extent of accumulated profits.
Distribution by a company to its shareholders of debentures, debenture-stock or deposit certificates, with or without interest, is treated as dividend to the extent of accumulated profits, whether capitalised or not. The provision also covers bonus shares issued to preference shareholders, and the deeming fiction applies only up to the amount of accumulated profits existing at the date of distribution or payment. Accumulated profits include all profits of the company up to that date.
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