PQR Ltd. wants to declare interim dividend during the financial year 2019-20. The company incurred losses for the first quarter ended 30th June, 2019 of the current year. Can the company declare interim dividend? What ar

Section 123(3) of the Companies Act, 2013 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 closure of financial year till holding of the annual general meeting out of the 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 the quarter preceding the date of declaration of the interim dividend: Provided that in case the company has incurred loss during the current financial year up to 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. Therefore, the company can declare interim dividend inspite of losses in the first quarter ended 30th June, 2019 of the current year. However, the interim dividend shall be declared at or below the average dividends declared by the company during immediately preceding three financial years. Check points in respect of declaration of dividend are as under: The amount of dividend, including interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during the immediately preceding three financial years. The amount of dividend, including interim dividend, was deposited in a scheduled bank in a separate account within five days from the date of declaration of such dividend. The company has paid dividend within 30 days from the date of declaration. The company has transferred the total amount of dividend which remains unpaid or unclaimed for 30 days from the date of declaration to unpaid dividend account within seven days from the expiry of the said 30 days. The company has prepared a statement containing the names and other details to whom the unpaid dividend is to be paid alongwith the amount of unpaid dividend and place the same on the website of the company and also on any other web-site approved by the Central Government for this purpose, within 90 days after holding of AGM or the date on which it should have been held. In case of inadequate profits or absence of profits, the rate of dividend declared has not exceeded the average at the rates at which dividend was declared by it in the three years immediately preceding that year. The company has not declared and paid any dividend from reserves other than free reserves as defined in Section 2(43) of the Companies Act, 2013. The total amount to be drawn from such accumulated profits shall not exceed one - tenth of the sum of its paid-up share capital and free reserves as appearing in the latest audited financial statement. Ensure that carried over previous losses and depreciation not provided in previous year(s) are set off against profits of the Company of the current year. The dividend is paid by the company by cheque or warrant or by any electronic mode. The company has before declaration of dividend transferred such percentage of profits to reserves as decided.