law: Companies Act, 2013 
  Chapter
  
  VIII
  Declaration
  
  and Payment of Dividend
  123.
  
    Declaration
  
  of dividend.
  1.      No dividend shall be
  
  declared or paid by a company for any financial year except—
  a.     
  
    out
  
  of the profits of the company for that year arrived at after providing for
  
  depreciation in accordance with the provisions of sub-section (2 ), or
  
  out of the profits of the company for any previous financial year or years
  
  arrived at after providing for depreciation in accordance with the provisions
  
  of that sub-section and remaining undistributed, or out of both; or
  b.    
  
    out
  
  of money provided by the Central Government or a State Government for the
  
  payment of dividend by the company in pursuance of a guarantee given by that
  
  Government:
  Provided
  
  that a company may, before the declaration of any dividend in any financial
  
  year, transfer such percentage of its profits for that financial year as it may
  
  consider appropriate to the reserves of the company:
  Provided
  
  further that where, owing to inadequacy or absence of profits in any financial
  
  year, any company proposes to declare dividend out of the accumulated profits
  
  earned by it in previous years and transferred by the company to the reserves,
  
  such declaration of dividend shall not be made except in accordance with such
  
  rules as may be prescribed in this behalf:
  Provided
  
  also that no dividend shall be declared or paid by a company from its reserves
  
  other than free reserves.
  1.     
  2.      For the purposes of
  
  clause (a ) of sub-section (1 ), depreciation shall be provided in
  
  accordance with the provisions of Schedule II.
  3.      The Board of
  
  Directors of a company may declare interim dividend during any financial year
  
  out of the surplus in the profit and loss account and out of profits of the
  
  financial year in which such interim dividend is sought to be declared:
  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 the immediately
  
  preceding three financial years.
  1.     
  2.     
  3.     
  4.      The amount of the
  
  dividend, including interim dividend, shall be deposited in a scheduled bank in
  
  a separate account within five days from the date of declaration of such
  
  dividend.
  5.      No dividend shall be
  
  paid by a company in respect of any share therein except to the registered
  
  shareholder of such share or to his order or to his banker and shall not be
  
  payable except in cash:
  Provided
  
  that nothing in this sub-section shall be deemed to prohibit the capitalization
  
  of profits or reserves of a company for the purpose of issuing fully paid-up
  
  bonus shares or paying up any amount for the time being unpaid on any shares
  
  held by the members of the company:
  Provided
  
  further that any dividend payable in cash may be paid by cheque or warrant or
  
  in any electronic mode to the shareholder entitled to the payment of the
  
  dividend.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.      A company which fails
  
  to comply with the provisions of sections 73 and 74 shall not, so long as such
  
  failure continues, declare any dividend on its equity shares.