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

Kaveri Foods Ltd declared a final dividend at its AGM on 10 July. The dividend was not paid within 30 days because of a dispute with a bank over the mandate. The dispute was not a valid ground under the Act. What is the consequence for the company?

The company must transfer the unpaid dividend to a special Unpaid Dividend Account with a scheduled bank within seven days after the 30-day payment period expires. A declared dividend does not lapse, is not forfeited, and cannot be held in the company's own account.

  1. AThe company must transfer the dividend to the Unpaid Dividend Account within 7 days from the expiry of the 30-day periodCorrect
  2. BThe company may keep the money in its own current account until the shareholders claim it
  3. CThe declaration lapses and the board must declare fresh dividend
  4. DThe dividend is forfeited and added to general reserve

Explanation

Where a dividend has been declared but not paid or claimed within 30 days of declaration, the company must transfer the total unpaid amount to a special Unpaid Dividend Account in a scheduled bank within 7 days from the expiry of the 30 days. Declared dividend cannot lapse or be forfeited, so the other options are wrong.

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