Due to inadequacy of profits during the year ended 31st March, 2018, Meenu Ltd. proposes to declare 12.50% dividend out of free reserves. From the following particulars, find out, can the company declare & pay divide

Amount need to be drawn from reserves for 12.50% dividend (A) 12.50% dividend on ₹1,00,00,000 = ₹12,50,000 (B) Profit Available Current Year Profit: ₹2,50,000 Less: Preference Dividend: (₹1,00,000) ₹1,50,000 Amount need to be drawn from reserves ₹11,00,000 (₹12,50,000 - ₹1,50,000) Conditions as per Companies (Declaration and Payment of Dividend) Rules, 2014 Condition I: Since 12.50% is lower than the average rate of Dividend 15%, 12.50% dividend can be declared. Condition II: Maximum amount that can be drawn from the accumulated profits and reserves should not exceed 10% of paid up capital plus free reserves i.e. ₹13,80,000 (10% of 10,00,000 + ₹1,00,00,000 + ₹28,00,000). Condition III: The balance of reserves ₹17,00,000 after withdrawal of ₹11,00,000 (₹28,00,000 - ₹11,00,000) should not fall below 15% its paid up capital i.e. ₹16,50,000 (15% of ₹1,10,00,000). Since, all the three conditions are satisfied, the company can withdraw ₹11,00,000 from accumulated profits and declare and pay dividend @ 12.50% on equity shares.