Transfer to Reserves Section 123 Of Companies Act 2013 || Registerkaro.in

Section 123 allows for the declaration of interim dividends before the adoption of financial statements at the Annual General Meeting (AGM). Such dividends must be declared from profits earned during the financial year or from profits of the preceding financial year, ensuring prudence in dividend distribution. Before declaring dividends, companies must allocate a certain percentage of profits to a reserve fund, as stipulated by their Articles of Association. This practice strengthens the company's financial resilience by setting aside funds for future contingencies and investments.