Dividend
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
27 September 2014
If a private limited co announced dividend in AGM but not transfer the Amount to dividend A/C or not pay out the amount within 10 days from AGM. In this connection my query what will be the consequent effect for violation.
If a private limited co announced dividend in AGM but not transfer the Amount to dividend A/C or not pay out the amount within 10 days from AGM. In this connection my query what will be the consequent effect for violation.
29 September 2014
Punishment for failure to distribute dividend
Section 127 provides that where a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been paid within 30 days from the date of declaration to any shareholder entitled to the payment of the dividend, every director of the company shall, if he is knowingly a party to the default, be punishable with imprisonment up to 2 years and with fine which shall not be less than ₹ 1000/- for every day during which such default continues and the company shall be liable to pay simple interest @ 18% per annum during the period for which such default continues.
The proviso to this section provides that no offence under this section shall be deemed to have been committed-
• Where the dividend could not be paid by reason of the operation of any law;
• Where a shareholder has given directions to the company regarding the payment of the dividend and those directions cannot be complied with and the same has been communicated to him;
• Where there is a dispute regarding the right to receive the dividend;
• Where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or
• Where, for any other reason, the failure to pay the dividend or to post the warrant within the period under this Section was not due to any default on the part of the company.
Section 127 provides that where a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been paid within 30 days from the date of declaration to any shareholder entitled to the payment of the dividend, every director of the company shall, if he is knowingly a party to the default, be punishable with imprisonment up to 2 years and with fine which shall not be less than ₹ 1000/- for every day during which such default continues and the company shall be liable to pay simple interest @ 18% per annum during the period for which such default continues.
The proviso to this section provides that no offence under this section shall be deemed to have been committed-
• Where the dividend could not be paid by reason of the operation of any law;
• Where a shareholder has given directions to the company regarding the payment of the dividend and those directions cannot be complied with and the same has been communicated to him;
• Where there is a dispute regarding the right to receive the dividend;
• Where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or
• Where, for any other reason, the failure to pay the dividend or to post the warrant within the period under this Section was not due to any default on the part of the company.
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