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A company has faced major operational losses in the current financial year. To reassure shareholders, the Board revalues its property holdings, recording a substantial gain, and resolves to declare a dividend solely from this revaluation reserve. According to Section 123 of the Companies Act, 2013, what is the legal validity of such a dividend declaration?
The action is invalid as the law strictly confines dividend payouts to bank reserves
The action is invalid as the law strictly confines dividend payouts to free reserves
The action is invalid as the law strictly confines dividend payouts to cash reserves
The action is invalid as the law strictly confines dividend payouts to firm reserves
The action is invalid as the law strictly confines dividend payouts to free reserves
Practice and solve "A company has faced major operational losses in the current financial year. To reassure shareholders..." for Part 5 Domain Knowledge - CIL MT Company Secretary 2026. The correct answer is Option B: The action is invalid as the law strictly confines dividend payouts to free reserves. Detailed step-by-step solution, conceptual clarity, and formulas on Examoogle.
Practice and solve "A company has faced major operational losses in the current financial year. To reassure shareholders..." for Part 5 Domain Knowledge - CIL MT Company Secretary 2026. The correct answer is Option B: The action is invalid as the law strictly confines dividend payouts to free reserves. Detailed step-by-step solution, conceptual clarity, and formulas on Examoogle.
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