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CA Intermediate · Corporate and Other Laws · Declaration and Payment of Dividend

Himalaya Textiles Ltd declared a final dividend at its annual general meeting on 10 July. The dividend warrant was not posted to shareholder Mr. Ramesh within the prescribed time and the amount remains unpaid. What is the legal position regarding the time within which a declared dividend must be paid?

A company must pay a declared dividend within 30 days from the date of declaration. If it fails, the dividend remains payable with interest as prescribed, and defaulting directors may face penalty. Periods of 15, 60 or 90 days are not the statutory limit.

  1. AWithin 30 days from the date of declarationCorrect
  2. BWithin 15 days from the date of declaration
  3. CWithin 60 days from the date of declaration
  4. DWithin 90 days from the date of declaration

Explanation

Under the Companies Act, 2013, the dividend declared by a company must be paid within 30 days from the date of declaration to the entitled shareholders. The 15-day and 60-day periods are not the statutory period. Failure to pay attracts interest and penal consequences for directors.

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