§ Mr. William Edwards
asked the Secretary of State for Trade and Industry whether firms receiving cash grants for modernisation are entitled to treat such grants as revenue available for distribution.
§ Sir G. Howe
There is no uniform professional practice as to how cash grants should be treated in the accounts, apart from the obligation that the accounts shall show a true and fair view of the company's state of affairs. However, it is a fundamental rule of company law that, save in the exceptional circumstances covered by Section 65 of the Companies Act 1948, dividends can only be paid out of profits and not out of capital.