03 October 2013
Dear Experts, We gave conducted an AGM for Dividend Declaration on 30 Sep. So we need to transfer the money to the dividend account by 5 OCT.
My question is, what if we are not able to transfer the dividend Amount to the Dividend account within 5 days. Also please let me know what will be the due date for distribution of Dividend, I mean by what time we should pay the amount to the shareholders.
Firstly you transfer dividend amount in separate dividend account.
Pursuant to section 207, where a dividend has been declared by a company, it has to be paid or the warrant in respect thereof has to be sent/posted within 30 days from the date of declaration to the shareholders entitled to the same.
Opening of a separate bank account for making payment of dividend and deposit the amount of dividend into the account within a period of 5 days of its declaration:
Section 205A state that the amount of dividend including interim dividend shall be deposited in a separate bank account within five days from the date of such declaration. Therefore, a company cannot use the amount even upto the period of thirty days and it is obligatory on the part of the company to keep the entire amount of the dividend into a separate bank account, which shall be exclusively utilised for payment of the dividend.
A company which has declared dividend must open an account in a scheduled bank and transfer the entire net amount of dividend to the above account within 5 days from the date of declaration and simultaneously should dispatch the dividend warrants to the shareholders and should not wait for 37 days to transfer the amount to that account. What the companies generally do is instruct the bank to first open an account styled as "ABC Limited Dividend, 2005 Account" and than the bank further asked that on the 37th day after the date of the annual general meeting (which date may be indicated to the bank) the nomenclature of the said account be changed as "ABC Limited Unpaid Dividend Account-2005"
04 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.
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