The Board of Directors of Peculiar Ltd. proposes to recommend a final dividend of ₹25 each to all the equity shareholders of the company. The company seeks your opinion on the following: The company wants to deposit the

The Peculiar Ltd has to follow below procedure for recommending final dividend: Referring to section 123(4) of Companies Act, 2013, the amount of the dividend has to be deposited in a scheduled bank. The company should first ensure that said co-operative bank is scheduled bank from the list of scheduled bank available at RBI website, and then it may deposit the dividend amount in the scheduled Co-operative Bank. Referring to section 123(6) of Companies Act, 2013 a company which fails to comply with the provisions relating to acceptance and repayment of deposits shall not, so long as such failure continues, declare any dividend on its equity shares. Hence Peculiar Ltd. cannot declare dividend till the failure persists. Referring to third proviso to Section 123(1) no dividend shall be declared or paid by a company from its reserves other than free reserves. Free reserves, as per Section 2(43), means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend: Provided that: any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or any change in carrying amount of an asset or of a liability recognised in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value, shall not be treated as free reserves; Hence dividend cannot be declared out of the capital reserves of the company. Referring to section 123(5) dividend shall not be payable in cash. Hence company's proposal to pay dividend through cash counter by way of cash voucher is not permitted under law.