SCENARIO: AMO Limited purchases shares of BEMI Limited by investing 1,000,000.00 ZMW. The dividend received on these shares reflects in the profit and loss account of the company. Further, the workers of the company receive an annual bonus and the dividend amount is taken into account in calculating the overall bonus figure. A few years later, AMO Limited transfers the shares of BEMI Limited to CUMI Limited, which is a wholly owned subsidiary of AMO Limited. Post transferring of the shares, the dividends do not reflect in the accounts of AMO Limited. This leads to a reduction in the overall bonus amount figure. Is AMO Limited legally allowed to do so? Which legal theory needs to be mentioned here?
SCENARIO: AMO Limited purchases shares of BEMI Limited by investing 1,000,000.00 ZMW. The dividend received on these shares reflects in the profit and loss account of the company. Further, the workers of the company receive an annual bonus and the dividend amount is taken into account in calculating the overall bonus figure. A few years later, AMO Limited transfers the shares of BEMI Limited to CUMI Limited, which is a wholly owned subsidiary of AMO Limited. Post transferring of the shares, the dividends do not reflect in the accounts of AMO Limited. This leads to a reduction in the overall bonus amount figure. Is AMO Limited legally allowed to do so? Which legal theory needs to be mentioned here?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
SCENARIO: AMO Limited purchases shares of BEMI Limited by
investing 1,000,000.00 ZMW. The dividend received on these shares
reflects in the
workers of the company receive an annual bonus and the dividend
amount is taken into account in calculating the overall bonus figure.
A few years later, AMO Limited transfers the shares of BEMI Limited
to CUMI Limited, which is a wholly owned subsidiary of AMO
Limited. Post transferring of the shares, the dividends do not reflect in
the accounts of AMO Limited. This leads to a reduction in the overall
bonus amount figure.
Is AMO Limited legally allowed to do so? Which legal theory needs to
be mentioned here?
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