Dividend distribution
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
15 October 2013
Sir, can a company give dividend by hand to few shareholders and the rest by registered post / courier?
15 October 2013
Hi
Payment of dividend only in cash/dividend warrant/demand draft/cheques
Section 205(3) specifically states that no dividend shall be payable except, in cash. However the dividend payable in cash may be paid by cheque or warrant/Demand Draft sent through the post directed to the registered address of the shareholder/beneficiaries entitled to the payment of the dividend or in the case of joint shareholders, to the registered address of that one of the joint shareholders which is first named on the register of members, or to such person and at such address as the shareholder or the joint shareholders may in writing direct.
In general practice the dividend is being paid by means of sending account payee dividend warrants to the concerned shareholders at the addresses registered by them with the company. Dividend warrant inter alia contains particulars such as dividend warrant No., folio No.,/DP ID & Client ID, name of shareholders, amount of dividend, name of the company and address of its registered office, etc.
In case of payment through the dividend warrant the following points should be considered in this regard:—
(i) Most of the companies keep their dividend warrants initially valid for three months. The Department's clarification, dated 15-3-1989 advises that the companies should extend the currency of the dividend warrant up to six months to facilitate the shareholders to encash the same.
(ii) According to P/B Press Release, dated 23-6-1993 dividend warrants will have to be compulsorily registered under the Post Office Rules with effect from 1-7-1993. This requirement is intended to ensure the security of the contents, which are valuable. However, P/B Press Release, dated 22-7-1993 states that compulsory posting of dividend warrants would take effect from 1-9-1993 and it has been clarified that the registration is compulsory only if these items are enclosed in envelopes with nature of contents superscribed on them or the nature of enclosures are clearly manifest to the post office by the use of "window" envelopes or the like.
Payment of dividend only in cash/dividend warrant/demand draft/cheques
Section 205(3) specifically states that no dividend shall be payable except, in cash. However the dividend payable in cash may be paid by cheque or warrant/Demand Draft sent through the post directed to the registered address of the shareholder/beneficiaries entitled to the payment of the dividend or in the case of joint shareholders, to the registered address of that one of the joint shareholders which is first named on the register of members, or to such person and at such address as the shareholder or the joint shareholders may in writing direct.
In general practice the dividend is being paid by means of sending account payee dividend warrants to the concerned shareholders at the addresses registered by them with the company. Dividend warrant inter alia contains particulars such as dividend warrant No., folio No.,/DP ID & Client ID, name of shareholders, amount of dividend, name of the company and address of its registered office, etc.
In case of payment through the dividend warrant the following points should be considered in this regard:—
(i) Most of the companies keep their dividend warrants initially valid for three months. The Department's clarification, dated 15-3-1989 advises that the companies should extend the currency of the dividend warrant up to six months to facilitate the shareholders to encash the same.
(ii) According to P/B Press Release, dated 23-6-1993 dividend warrants will have to be compulsorily registered under the Post Office Rules with effect from 1-7-1993. This requirement is intended to ensure the security of the contents, which are valuable. However, P/B Press Release, dated 22-7-1993 states that compulsory posting of dividend warrants would take effect from 1-9-1993 and it has been clarified that the registration is compulsory only if these items are enclosed in envelopes with nature of contents superscribed on them or the nature of enclosures are clearly manifest to the post office by the use of "window" envelopes or the like.
15 October 2013
Payment of dividend to the registered shareholders, etc.:
Dividend shall be paid by a company in respect of any shares therein—
(i) to registered holder of such share or to his order or to his bankers, or
(ii) in case a share warrant has been issued, to the bearer of such warrant or to his bankers.
However, bankers of a registered shareholder are not required to make a separate application to the company for the payment of the dividend. [Section 206(2)]
Payment of dividend to the registered shareholders, etc.:
Dividend shall be paid by a company in respect of any shares therein—
(i) to registered holder of such share or to his order or to his bankers, or
(ii) in case a share warrant has been issued, to the bearer of such warrant or to his bankers.
However, bankers of a registered shareholder are not required to make a separate application to the company for the payment of the dividend. [Section 206(2)]
15 October 2013
Despatch of dividend warrants by registered post in excess of Rs. 1,500:
Dividend Warrants/cheques for an amount exceeding Rs. 1,500 per instrument should be sent by registered post and the dividend warrant/cheques below the said amount be dispatched under certificate of posting. However, the company may also deliver the dividend warrant to the members personally on obtaining a request letter to that effect in writing.
Despatch of dividend warrants by registered post in excess of Rs. 1,500:
Dividend Warrants/cheques for an amount exceeding Rs. 1,500 per instrument should be sent by registered post and the dividend warrant/cheques below the said amount be dispatched under certificate of posting. However, the company may also deliver the dividend warrant to the members personally on obtaining a request letter to that effect in writing.
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