Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

The Board of Directors meeting of M/s Dikpal Commercial Bank Limited, proposed dividend @ 50 % for the fiscal year 2066/067. The Annual General Meeting approved the dividend @ 70% instead of the proposed dividend the Board of Directors. Examine the decision of the Annual General Meeting to approve dividend in excess of the proposed dividend the Board of Directors and whether it is commensurate with the company Act, 2063.

Answer

The Annual General Meeting is authorized body to approve dividend under section 77 (6) of the Company Act, 2063. The proviso to the said section has however, restricted the Annual General Meeting to approve the dividend in excess of the dividend proposed the Board of Directors. However, the dividend at lower rate can be approved. Thus, the decision of Annual General Meeting of Ms. Shangrila Commercial Bank Ltd. to approve dividend in excess of the dividend proposed the Board of Directors is void and Annual General Meeting can only approve the dividend at the lower rate or at the rate proposed the Board of Directors.



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