Smart Limited declared dividend at its AGM on 31-07-2025. The dividend warrant to Mr. A was posted on 22nd August 2025 but, due to postal delay, was…
CA Intermediate · Corporate and Other Laws · MTP · September 2026
Smart Limited declared dividend at its AGM on 31-07-2025. The dividend warrant to Mr. A was posted on 22nd August 2025 but, due to postal delay, was received and encashed only on 5th September 2025. Can Mr. A take action against the company for failing to distribute the dividend within 30 days of declaration?
Suggested Answer and Working Notes:
Provisions: Section 127 of the Companies Act, 2013 requires a company to pay or dispatch declared dividend within 30 days of declaration. Where paid by dividend warrant, it is the posting of the warrant at the shareholder's registered address, within the prescribed period that discharges the company's obligation. Analysis: Here, dividend was declared on 31-07-2025 and the warrant was posted on 22-08-2025, well within 30 days. Mr. A's delayed receipt on 5-09-2025 (due to postal delay) does not amount to a default by the company. Conclusion: Mr. A therefore cannot maintain any action against Smart Limited for failure to distribute dividend within the statutory period.
Topics: Declaration and Payment of Dividend
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