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Dividend account

namrata (company secretary ) (422 Points)

07 October 2010

Hi Freinds,

Can any one please tel me if in a Pvt Ltd Company if after declaration of Dividend within Five Days Divideend A/c is required to be opened. But if its not been opened and instead the dividend amount is paid through normal account is it fine to do that?

Secondly , if the dividend account is not opened within 5 days then for a Pvt Ltd company what are the penalties?

Please note its urgent..

Regards

Namrata

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Ajay Mishra (Company Secretary) (74332 Points)
Replied 07 October 2010

A company which has declared dividend must open an account in 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 warrant to the shareholders and should not wait for 37 days to transfer the amount to that account.

Section 205(1A) maid it compulsory to open a separate account in schedule bank and section 205A made it compulsory that amount of dividend including interim dividend shall be deposited in a separate bank account if it is not paid within time from the date of declaration,.

If you not comply the provisions of section 205A, you will be punishable u/s 205A(8). Of the Companies Act, 1956.

Regards