List the conditions to be satisfied for declaration of dividend out of reserves.

Section 123 of the Companies Act, 2013 read with Rule 3 of the Companies (Declaration and Payment of Dividend) Rules, 2014 provides for the declaration of dividend out of reserve in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfilment of the following conditions: The rate of dividend shall not exceed the average of the rates at which dividend was declared by it in the 3 immediately preceding financial years. This condition shall not apply to a company which has not declared any dividend in each of the three preceding financial years. The total amount to be drawn from such accumulated profit 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. The amount so drawn shall first be utilized to set off the losses incurred in the financial year in which dividend is declared before any dividend in respect of equity shares is declared. The balance of reserves after such withdrawal shall not fall below 15% of its paid-up share capital as appearing in the latest audited financial statement.