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    Question

    A company desires to declare and pay dividends to its

    shareholders. The company has obtained Board approval. Under which section of the Companies Act, 2013 is the declaration and payment of dividends regulated?
    A Section 123 Correct Answer Incorrect Answer
    B Section 124 Correct Answer Incorrect Answer
    C Section 125 Correct Answer Incorrect Answer
    D Section 126 Correct Answer Incorrect Answer
    E Section 127 Correct Answer Incorrect Answer

    Solution

    Section 123 of the Companies Act, 2013 deals with "Declaration and payment of dividend". The section prescribes the conditions for dividend declaration and payment, including that: (1) the dividend shall be paid only out of free reserves, surpluses, or profits of the company made during the current financial year or previous financial years, (2) no dividend shall be paid if the company has incurred losses, (3) dividend shall be paid within 30 days of declaration unless otherwise authorized by the Registrar, and (4) unclaimed dividends must be transferred to the Investor Education and Protection Fund. Section 124 addresses investor education and protection fund, Section 125 addresses unpaid and unclaimed amounts, Section 126 addresses crediting amounts, but Section 123 specifically prescribes dividend declaration and payment.

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