Dividend distribution

Hi All,

I have my final exams in May,16 and I am trying to study Corporate Law on my own.

I had a query.. hope sm1 can help.

As per Section 123(1) for distribution of Dividend out of Reserves, Rule 3(1) says: “The rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the three years immediately preceding that year”.

I can draw three different meanings. Please help me to know which one is correct?

Example:

what will be the limit for rate of Dividend:-

a) (3 + 7)/3 = 3.33%

b) (4 + 3 + 7)/3 = 4.67%

c) (3 + 7)/2 = 5%

Thank You.