January 6, 2024 | CA B K Goyal & Co LLP

Section 48 – The Competition Act, 2002

The Competition Act 2002 / CA Bhuvnesh Goyal / January 6, 2024

Contravention by companies (1) Where a person committing contravention of any of the provisions of this Act or of any rule, regulation, order made or direction issued thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such contravention. (2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, regulation, order made or direction issued thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that contravention and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section,— (a) “company” means a body corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases | Income Escapement Cases | Search & Seizure | CIT Appeal | ITAT Appeal | Auditors | Internal Audit | Financial Audit | Process Audit | IEC Code | CA Certification | Income Tax Penalty Notice u/s 271(1)(c) | Income Tax Notice u/s 142(1) | Income Tax Notice u/s 144 |Income Tax Notice u/s 148 | Income Tax Demand Notice | Psara License | FCRA Online Company Registration Services in major cities of India Company Registration in Jaipur | Company Registration in Delhi | Company Registration in Pune | Company Registration in Hyderabad | Company Registration in Bangalore | Company Registration in Chennai | Company Registration in Kolkata | Company Registration in Mumbai | Company Registration in India | Company Registration in Gurgaon | Company Registration in Noida Complete CA Services CA in Delhi | CA in Gurgaon | CA in Noida | CA in Jaipur | CA Firm in India RERA Services RERA Rajasthan | RERA Haryana | RERA Delhi | UP RERA

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Section 47 – The Competition Act, 2002

The Competition Act 2002 / CA Bhuvnesh Goyal / January 6, 2024

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Declaration and Payment of Dividend Under Companies Act 2013

Companies Act 2013 / CA Bhuvnesh Goyal / January 6, 2024

Companies rely on funds to manage the affairs of their business successfully. Shareholders in a company play a vital role in raising funds, and in that process, they become its stakeholders. They exercise control over the share of profits in proportion to the money they invest. Dividend is known as the share of profit by shareholders. Shareholders are also considered the owners of the company; therefore, they are entitled to get a dividend. There is not an exact definition of the dividend in the Companies Act, 2013. Under section 2(35), it merely mentions dividends as “any interim dividend.” With a view to distribute the profit among the shareholders of the company, the Declaration and Payment of Dividend under the Companies Act were enacted. In this article, we shall cover various provisions related to the Declaration and Payment of Dividend under the Companies Act, 2013 Meaning of “Dividend” Dividend refers to the reward a corporation offers to its shareholders, in cash or otherwise. Dividends can be given in various ways, such as cash payment, inventory, or some other form. It is determined by its Management Board and requires the approval of the shareholders. A dividend is the distribution of a portion of the company’s earnings, decided and managed by the company’s board of directors, and paid to a class of its shareholders. A dividend may be defined as a reward a company gives to its shareholders in return for their investment in the company. It is the portion of profit received by the shareholders after the accounts of the company are finalized. The reward may take the form of cash or stock. Section 2(35) of the Companies Act, 2013 (“Companies Act”) defines “dividend”, stating that it includes any ‘interim dividend’. It is given in proportion to the amount paid for each share held by the shareholders if so authorized by the Articles of Association of the company (Section 51, Companies Act). All companies except Non-Profit Organizations, i.e., companies registered under Section 8, can declare a dividend. Understanding Dividend as per Companies Act 2013 Dividend is defined under Section 2(35) of the Companies’ act, 2013 includes any interim dividend: Dividends are sum of money to be paid to the members of the company out of the profits made by the Company. It is a share of profits of the company. It may be noted that dividend is paid to shareholders in proportion to the amount paid-up on the share held by them. Preference shareholders re always paid the dividend in preference to the equity shareholders. Who can declare Dividend? the provisions contained in the Companies Act, 2013, all companies can declare dividends except for those who are registered under section 8. Dividend is to be declared by the company at its Annual General meeting on such rate as may be recommended by board, and it has no power to declare dividend exceeding the amount recommended by the board. Once declared, it becomes debt payable by the company to its shareholders, who can sue the company for the non-payment of the dividend. A company cannot pass a resolution for the declaration of dividend, without passing a resolution for the adoption of accounts. Hence, a company shall adopt its books of accounts first and then only, entitled to declare the dividend. Types of dividend There are following types of dividend: Interim dividend; and Final dividend Preference share Dividend Interim Dividend vs. Final Dividend As per Section 2(35) of the Companies Act 2013, an Interim Dividend will be declared by the board any time before the closure of the fiscal year by the Private Limited Company. Following is the difference between interim and final dividend: Sources of Dividend The basic principle of a declaration of dividend is that it shall be paid out of profit only. As per the Companies Act, it can be paid out of the following sources: From the current year’s profit Accumulated profit from the previous year Out of the money provided by the Central or State Government for the payment of dividends in pursuance of guarantee given Provisions relating to Payment of Dividend The provisions under the Companies Act, 2013 provides that no dividend shall be paid except through cash and where the dividend is payable in cash, it can be paid by way of cheque, warrant or by any electronic mode to the shareholder who is eligible to receive the dividend. However, it may be kept in mind that a company, who has defaulted in compliance with respect to the provisions of section 73 and section 74 comprising of prohibition of acceptance of deposits from public and repayment of deposits, shall be barred to declare dividend. The amount of the dividend (Including the interim dividend) must be deposited in the bank in a separate account in five days from the date such declaration of dividend is made. The dividend shall be payable to the eligible shareholder by way of cash. Mandatory Conditions for Dividend Declaration Declaring dividend out of current year’s profit Company has to meet the following requirements for declaring dividend out of its profit: Depreciation: Depreciation shall be provided on all depreciable assets as per the prescribed rate or its useful life before declaring the dividend. Reserve: Company cannot declare or pay a dividend unless it transfers a certain percentage of profit to reserve. Set off previous year loss: Company must set off the carried forwarded previous year’s loss from the current year’s profit before declaring the dividend. Free Reserve: Company shall not declare its dividend out of any reserve other than Free Reserve. Declaring Dividend out of Surplus Reserves in case of insufficient current year’s profit The company can declare the dividend out of surplus reserve in case of insufficient current year’s profit subject to the following conditions: Rate of Dividend: The dividend rate shall not exceed the average of the declared dividend of three immediately preceding years. Withdrawal amount: The total amount of withdrawal from accumulated reserve shall not exceed 1/10th of the paid-up share capital and free reserves as per the latest audited financial statement. Utilization

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Section 46 – The Competition Act, 2002

The Competition Act 2002 / CA Bhuvnesh Goyal / January 6, 2024

Power to impose lesser penalty The Commission may, if it is satisfied that any producer, seller, distributor, trader or service provider included in any cartel, which is alleged to have violated section 3, has made a full and true disclosure in respect of the alleged violations and such disclosure is vital, impose upon such producer, seller, distributor, trader or service provider a lesser penalty as it may deem fit, than leviable under this Act or the rules or the regulations: 1[Provided that lesser penalty shall not be imposed by the Commission in cases where the report of investigation directed under section 26 has sbeen received before making of such disclosure.] Provided further that lesser penalty shall be imposed by the Commission only in respect of a producer, seller, distributor, trader or service provider included in the cartel, who 2[has] made the full, true and vital disclosures under this section: 3[Provided also that lesser penalty shall not be imposed by the Commission if the person making the disclosure does not continue to cooperate with the Commission till the completion of the proceedings before the Commission.] Provided also that the Commission may, if it is satisfied that such producer, seller, distributor, trader or service provider included in the cartel had in the course of proceedings,— (a) not complied with the condition on which the lesser penalty was imposed by the Commission; or (b) had given false evidence; or (c) the disclosure made is not vital, and thereupon such producer, seller, distributor, trader or service provider may be tried for the offence with respect to which the lesser penalty was imposed and shall also be liable to the imposition of penalty to which such person has been liable, had lesser penalty not been imposed. Amendment 1. Sub. by s. 39, ibid., for the first proviso (w.e.f. 20-5-2009). 2. Subs. by s. 39, ibid., for “first” (w.e.f. 20-5-2009). 3. The proviso ins. by s. 39, ibid. (w.e.f. 20-5-2009). Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases | Income Escapement Cases | Search & Seizure | CIT Appeal | ITAT Appeal | Auditors | Internal Audit | Financial Audit | Process Audit | IEC Code | CA Certification | Income Tax Penalty Notice u/s 271(1)(c) | Income Tax Notice u/s 142(1) | Income Tax Notice u/s 144 |Income Tax Notice u/s 148 | Income Tax Demand Notice | Psara License | FCRA Online Company Registration Services in major cities of India Company Registration in Jaipur | Company Registration in Delhi | Company Registration in Pune | Company Registration in Hyderabad | Company Registration in Bangalore | Company Registration in Chennai | Company Registration in Kolkata | Company Registration in Mumbai | Company Registration in India | Company Registration in Gurgaon | Company Registration in Noida Complete CA Services CA in Delhi | CA in Gurgaon | CA in Noida | CA in Jaipur | CA Firm in India RERA Services RERA Rajasthan | RERA Haryana | RERA Delhi | UP RERA

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