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of <h1>Dividend Rules 2014: Caps on Dividend Rates, Reserve Withdrawals, and Loss Offsetting for Companies with Insufficient Profits</h1> The Companies (Declaration and Payment of Dividend) Rules, 2014, issued by the Ministry of Corporate Affairs, outlines regulations for declaring dividends when profits are inadequate or absent. Effective from April 1, 2014, these rules stipulate that the dividend rate must not exceed the average rate of the past three years unless no dividend was declared in those years. Withdrawals from reserves cannot exceed one-tenth of the paid-up share capital and free reserves, and must first offset any current year losses. Reserves must remain above 15% of paid-up capital post-withdrawal. Companies must also address prior losses and depreciation before declaring dividends.
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