Utilisation of Dividend Equalisation Reserve

[Bhavani Prasad]

Dear Friends

Can we utilise Dividend Equalisation Reserve for payment of dividend or the same can be used for Buy back purpose?

Early response is expected.

Regards

Bhavani

[CS Riju]

Dear Sirs,

Dividend equalization reserves are revenue reserve that serves as a buffer between a certain dividend level and profits available. Sums are transferred to this reserve account in good years, and withdrawn from in poor years to maintain the dividend amount..

 

http://www.thehindubusinessline.com/features/mentor/of-reserves-and-liabilities/article1514908.ece

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Regards,
CS Riju C.K. B.Com., A.C.S., | Chennai-India +91 96000 64707  | Tanzania-East Africa +255686771384 

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[santosh gangavati]

Dear Ms.Bhavani Prasad,

Dividend Equalisation reserve can be utilised for buy back of shares.

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Thanks & Regards

Santosh.G

[Bhavani Prasad]

Mr Santhosh

I dont think that Dividend Equalisation reserve can be used for buy back of shares.

Because in the link provided by Mr Riju,Dividend Equalisation reserve is a specific, voluntary, revenue reserve which can be utilized only to maintain consistency of dividend and not for any other purpose.

Please check the link once again.

http://www.thehindubusinessline.com/features/mentor/of-reserves-and-liabilities/article1514908.ece

Regards

Bhavani Prasad

[santosh gangavati]

Yes...

The definition "Reserves" under SICA includes Dividend Equalisation Reserve and cannot be utilised for Buy Back.

Thanks for Correcting me.