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Hello
The dividend rules apply to every form of distribution of assets except the following:
? The issue of bonus shares whether fully or partly paid
? The redemption or purchase of the company’s shares out of capital or profits
? A reduction of share capital
? A distribution of assets to members in a winding upCan u tell me sir what does this mean since I haven’t read such concept in Kaplan text.
Thanks sirHi Garvit,
You need to be familiar with the dividend rules which are as follows;
In a Private company- a dividend can not be paid from Capital. It can only be paid from out of its distributable profit meaning the accumulated realised profit less the accumulated realised losses.
In a Public company – a dividend can not be paid from Capital. It can only be paid from out of its distributable profit meaning accumulated realised profit less accumulated realised losses less accumulated unrealised losses.
The above rules apply except in the context of the examples you referred to above.
I hope this clarifies.
Kind regards,
Vijay
Thanks sir , I know about the rules you discussed but by exception do they mean that a co ( both Ltd,plc) can ignore the above rules you mentioned? like-
First- if they give dividend in form of bonus share then they can ignore the rules.
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