The Board of Directors of Glass Making Ltd. have decided to declare interim dividend @18% for the current financial year of 2023-24. The company has incurred a loss of ₹107 crore during the current financial year up-to q

Section 123(3) of the Companies Act, 2023 provides that the Board of Directors of a company may declare interim dividend during any financial year or at any time during the period from the closure financial year till holding of the annual general meeting out of the surplus profit and loss account or out of the profits of the financial year for which such interim dividend is sought to be declared or out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend. In case the company has incurred loss during the current financial year upto the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during immediately preceding three financial years. In the given question, Glass Making Ltd. has incurred loss of ₹107 crore during the current financial year till the end of quarter ended on 30 th September, 2023, thus company cannot declare interim dividend at a rate higher than the average dividends declared by the company during immediately preceding three financial years of 2020-21, 2021-22 and 2022-23. Dividend rate of financial year of 2019-20 is not relevant for the declaration of interim dividend. Average rate of dividends during immediately preceding three financial years is 17%, while company has decided to declare interim dividend @18%, which is higher than the average rate of dividend during the immediately preceding three financial years. Thus, the decision of Board of directors is not as per the provisions of Companies Act, 2023.