Anoj Limited declared a final dividend to its shareholders at the Annual General Meeting on 1 st August, 2024. As per the decision, the dividend…
CA Intermediate · Corporate and Other Laws · MTP · January 2025
Anoj Limited declared a final dividend to its shareholders at the Annual General Meeting on 1 st August, 2024. As per the decision, the dividend payment was to be made within the stipulated 30-day period. However, due to internal financial constraints, the company failed to pay the declared dividend and did not dispatch the dividend warrants to the shareholders within the required timeframe. The default continued until 15 th October, 2024, leading to shareholder complaints. In light of this scenario, what specific punishments and liabilities could the company and the directors face due to this failure to pay the declared dividend within the 30-day period? Give your answer as per the provisions of the Companies Act, 2013.
Suggested Answer and Working Notes:
According to section 127 of the Companies Act, 2013, in case a company fails to pay declared dividends or fails to post dividend warrants within 30 days of declaration, following punishments are applicable: (i) Every director of the company shall be punishable with imprisonment of up to two years, if he is knowingly a party to the default. And, he shall also be liable to pay minimum fine of 1,000 for every day during which such default continues. (ii) The company shall be liable to pay simple interest at the rate of 18% p.a. during the period for which such default continues.
Topics: Declaration and Payment of Dividend
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