COMPANIES ACT - 1963 (ACT 179)

    Section - 71 - Legality of Dividend Payments

    (1) Except in a winding up, a company shall not pay a dividend to its shareholders or, except in accordance with sections 75 to 79 of this Code, make any return or distribution of any of its assets to its shareholders unless,

    (a) the company is able, after such payment, return or distribution, to pay its debt as they fall due;

    (b) the amount or value of such payment, return or distribution does not exceed its income surplus immediately prior to the making of such payment, return or distribution.

    (2) If any payment, return or distribution shall be made in contravention of this section,

    (a) every director of the company who is in default shall be jointly and severally liable to restore to the company the total amount by which the payment, return or distribution contravenes this section, with interest on such amount at the rate of five per centum per annum;

    (b) unless, within twelve months after the date of the payment, return or distribution, the total amount with interest thereon shall be restored to the company by the directors in accordance with paragraph (a) of this subsection, every shareholder shall be liable to restore to the company the amount received by him in contravention of this section;

    (c) if the directors of the company shall make restoration to the company in accordance with paragraph (a) of this subsection they shall have a right to be indemnified by any shareholder who has received any amount knowing that it contravenes this section to the extent of the amount received by him with interest thereon at the rate of five per centum per annum.

    (3) Any shareholder, officer or creditor of the company or the Registrar may apply to the Court for an injunction restraining a company from paying a dividend or from making a return or distribution in contravention of this section or for an order for restoration in accordance with subsection (2) of this section.

    (4) Any application by a shareholder or creditor shall be made in a representative capacity on behalf of himself and all other shareholders or creditors, as the case may be, of the company and the provisions of section 324 of this Code shall apply.

    (5) In relation to public companies, paragraph (b) of subsection (2) of this section shall be modified as stated in section 292 of this Code.