Providing for proposed dividend in profit and loss account and showing the same under the head “Current liabilities and provisions” in balance sheet Whether statutory obligation breach of which invites prosecution

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....-11‑1976. Subject:- Providing for proposed dividend in profit and loss account and showing the same under the head "Current liabilities and provisions" in balance sheet ‑ Whether statutory obligation breach of which invites prosecution The Department agrees that the dividend becomes a liability only when it is approved by the shareholders at the annual general meeting. It may, ho....

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.... the Companies (Transfer of Profits to Reserves) Rules, 1975 in the event of proposed dividend exceeding 10 per cent; and • Provisions of section 217(1)(c). In view of the above facts, the Department is of the firm view that there is a statutory obligation on the part of the companies to provide for proposed dividend in their profit and loss accounts and show the same under the hea....