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

Himalaya Textiles Ltd. declared a final dividend of Rs 5 per share at its annual general meeting held on 10 September. The company paid the dividend warrant to a shareholder, Mr. Rao, on 30 September. Under the Companies Act, 2013, within what time must a company ordinarily pay the declared dividend to the shareholder?

A company must pay a declared dividend to the shareholder within 30 days from the date of declaration. Payment made 20 days after the AGM declaration is therefore timely. Other periods such as 15, 60 or 90 days are not the statutory limit under the Companies Act, 2013.

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

Explanation

The Act requires a dividend, once declared, to be paid within 30 days of declaration. Here payment on 30 September is 20 days after 10 September, so it is in time. The 15, 60 and 90 day periods have no basis in the provision.

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