Section 123 of CA 2013 : Section 123: Declaration Of Dividend

Explanation using Example

Imagine XYZ Pvt. Ltd. had a profitable year in 2022 and wishes to declare a dividend in 2023. According to Section 123 of The Companies Act, 2013, the company must first calculate its profits after accounting for depreciation as per Schedule II. Let's say the profit after depreciation is $100,000. The company decides to transfer $20,000 to its reserves and declares a dividend from the remaining $80,000.

However, XYZ Pvt. Ltd. also had an unprovided depreciation from 2021 of $5,000. Before declaring the 2023 dividend, the company must set off this amount against the current year's profits. Therefore, the available pr...

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