Sources of Dividend Payment Section 123 Of Companies Act 2013 || Registerkaro.in
The section specifies that dividends can only be paid out of the company's profits for that financial year or any previous financial years, subject to certain conditions. This ensures that dividends are distributed only from profits earned by the company, safeguarding the interests of shareholders and creditors. Section 123 prohibits companies from declaring or paying dividends if they have incurred losses during the financial year or if their profits are inadequate. Additionally, companies cannot declare dividends if doing so would contravene the provisions of the Companies Act or any other law.
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