Unlisted Companies: Section 240 of Companies Act, 2017 "Restriction on declaration of dividend"
Reform IDF518
DescriptionThe law required that no dividend shall exceed recommendation by the board. Similarly, no dividend is to be paid from sale of immovable property or assets of capital nature, except where such transactions form whole or part of the company business and losses are set off against profit. However, it was proposed to apply solvency test instead, in line with global best practices. The solvency test is where a dividend can be not paid only if it affects the solvency of the company.
DepartmentSecurities and Exchange Commission of Pakistan (SECP)
Jurisdiction / LocationFederal - Entire Pakistan
SectorAll Sectors
Start Date
Target Deadline
Date Enacted
Implementation StatusIn Progress
Progress 25%
CCORR DirectionSimplify
Cost Savings PKR (Mil.)
Evidence