MNP Ltd. has a paid-up share capital of `10 crore and free reserves of ` 50 crores, as of 31st March 2019. The company made a loss of ` 40 lakhs after providing for depreciation for the year ended 31st March 2019 and as a result, the company was not in a position to declare any dividend for the said year out of profits. However, the Board of directors of the company announced the declaration of a dividend of 20% on the equity shares payable out of free reserves. The average dividend declared by the company in the last three years is 25%. Referring to the provisions of the Companies Act, 2013, examine the validity of the declaration of dividend