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

Kaveri Industries Ltd. declared a final dividend of Rs 20 lakh at its AGM on 10 August. The dividend warrants were not sent to member Mr. Deshmukh within the time allowed, and the company has no dispute with him. The company wants to know the time limit for payment. What is the legal position?

A company must pay a declared dividend within 30 days of the date of declaration. If it defaults, it must pay simple interest at 18% per annum for the period of default, apart from penal consequences for the directors responsible.

  1. AThe dividend must be paid within 30 days from the date of declarationCorrect
  2. BThe dividend must be paid within 60 days from the date of declaration
  3. CThe dividend must be paid within 90 days from the date of declaration
  4. DThe dividend must be paid before the end of the financial year in which it is declared

Explanation

The company must pay the declared dividend within 30 days from the date of declaration to the entitled shareholder. Failure makes the company liable to pay simple interest at 18% per annum during the period of default, and directors may be penalised. The 60 and 90 day periods do not apply to payment of declared dividend.

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