Alpha Herbals, a Section 8 company is planning to declare dividend in the Annual GeneralMeeting for the Financial Year ended 31-03-2023. Mr. Chopra is holding 800 equity shares ason date. State whether the act of the company is according to the provisions of the CompaniesAct, 2013
Question
Alpha Herbals, a Section 8 company is planning to declare dividend in the Annual GeneralMeeting for the Financial Year ended 31-03-2023. Mr. Chopra is holding 800 equity shares ason date. State whether the act of the company is according to the provisions of the CompaniesAct, 2013
Solution
The Companies Act, 2013, does not prohibit a Section 8 company (a company established with a charitable object) from declaring a dividend. However, the Act does stipulate that dividends can only be declared out of profits of the company, and any declaration of dividend out of capital is prohibited.
The Act also requires that the dividend must be approved by the shareholders at the Annual General Meeting (AGM). Therefore, if Alpha Herbals has made profits and the declaration of the dividend is approved by the shareholders at the AGM, then the act of the company is according to the provisions of the Companies Act, 2013.
As for Mr. Chopra, as an equity shareholder, he is entitled to receive a dividend. The amount of dividend he will receive will depend on the rate of dividend declared and the number of shares he holds. If he holds 800 shares, he will receive 800 times the per-share dividend amount.
Please note that this is a general interpretation of the relevant provisions of the Companies Act, 2013. The actual situation may vary depending on the specific facts and circumstances of the case.
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