Section 30 of The Warehousing Corporations Act, 1962 in hindi
- (1)Every Warehousing Corporation shall establish a reserve fund out of its annual net profits.
- (2)After making provision for bad and doubtful debts, depreciation on assets and all other matters which are usually provided for by companies registered and incorporated under the Companies Act, 1956 (1 of 1956), a Warehousing Corporation may, out of its net annual profits, declare a dividend: Provided that for so long as the reserve fund is less than the paid-up share capital of the Central Warehousing Corporation and until there has been repaid to the Central Government such sum, if any, as that Government may have paid under a guarantee given in pursuance of sub-section (1) of section 5 or sub-section (4) of section 27, the rate of such dividend, in the case of the Central Warehousing Corporation, shall not exceed the rate guaranteed by the Central Government under subsection (1) of section 5.
Summary
- Every Warehousing Corporation must create a reserve fund from its net profits each year.
- Before declaring a dividend to shareholders, the Corporation must make deductions for bad debts, doubtful debts, asset depreciation, and other standard corporate provisions.
- If the Central Warehousing Corporation's reserve fund is smaller than its paid-up share capital, its dividend payments face a strict limit.
- This limit also triggers if the Central Government has paid money to cover guarantees it made on the Corporation's shares or bonds, and the Corporation has not yet repaid the Government.
- Under these restricted conditions, the Corporation cannot declare a dividend rate higher than the minimum rate the Government originally guaranteed when the shares were issued.
Practical examples
FAQ
1. Can a Warehousing Corporation pay dividends out of its total income?
No, dividends can only be paid out of the net annual profits after setting aside money for a reserve fund, bad debts, and depreciation.
2. What happens if the Central Government had to step in and pay shareholders because the Corporation could not meet its guaranteed dividend?
If the Government had to pay under its guarantee, the Corporation must limit its future dividend rate to the originally guaranteed rate until the Government is completely repaid.
3. Does the dividend cap apply to all Warehousing Corporations?
The specific cap tied to the guaranteed rate and share capital size only applies to the Central Warehousing Corporation, not the State ones.
Test yourself
Q1.Under Section 30 of The Warehousing Corporations Act, 1962, what must a Warehousing Corporation establish out of its annual net profits?
Q2.Under Section 30 of The Warehousing Corporations Act, 1962, which of the following must be accounted for before the Corporation can declare a dividend?
Q3.Under Section 30 of The Warehousing Corporations Act, 1962, how does a Central Government payout under Section 5 (guaranteeing shares) or Section 27 (guaranteeing bonds) affect the Central Warehousing Corporation's dividends?
Q4.Under Section 30 of The Warehousing Corporations Act, 1962, the cap on the dividend rate for the Central Warehousing Corporation applies as long as the reserve fund is less than what amount?