Examine the validity of the following: (b) Board of Directors of XYZ Ltd wants to declare interim dividend after the end of financial year.

As per section 123(3), the board of directors of a company may declare interim dividend during any financial year or at any time during the period from closure of financial year till holding of the annual general meeting out of surplus in the profit and loss account or out of 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 quarter preceding the date of declaration of the interim dividend. Therefore, the Board of Directors of XYZ Ltd can declare interim dividend after the end of the financial year, but only until the holding of the annual general meeting, out of the specified sources of profit.