Question
A banking company cannot pay dividend under Section 15 until it has written off all of its what?
Solution
Section 15 of the Banking Regulation Act prohibits a banking company from paying any dividend on its shares until all its capitalised expenses, including preliminary expenses, organisation expenses, share-selling commission, brokerage and losses incurred, have been completely written off. This ensures that dividends are paid only out of genuine profits. The restriction protects the capital base and prevents distribution of fictitious profits to shareholders.
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