How much amount out of the profits of a company can be distributed as dividend amongst its shareholders?

The 1956 Act did not prescribe one of these fixed percentages as the portion of annual profits that must be distributed as dividend. Section 205 controlled lawful sources, depreciation and applicable reserve requirements. The declaration also depended on the company's decision and articles; Not fixed does not mean unrestricted payment from capital.

Current law: Companies Act 2013 section 123 now governs dividend sources and conditions. It still does not prescribe the universal 5%, 10% or 15% distribution suggested here. Transfer to reserves is voluntary under its section 123(1) proviso, unlike the former prescribed-transfer framework.