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CS Executive · Company Law and Practice · Distribution of Profits

Lotus Engineering Ltd failed to transfer Rs 5,00,000 of unpaid dividend to the Unpaid Dividend Account within the time allowed. What is the consequence under the Companies Act, 2013 for the period of default?

The company must pay interest at twelve per cent per annum from the date of default on the amount not transferred. That interest goes to the benefit of the members in proportion to their unpaid amounts, not to the Fund or Government.

  1. AInterest at twelve per cent per annum on the amount not transferred, benefiting the members in proportion to the amounts unpaid to themCorrect
  2. BInterest at twelve per cent per annum, payable to the Investor Education and Protection Fund
  3. CInterest at fifteen per cent per annum, payable to the Central Government
  4. DNo interest, but only a fine on the company

Explanation

On default in transferring, the company must pay interest at twelve per cent per annum from the date of default on the amount not transferred. The interest accrues for the benefit of the members in proportion to the amount remaining unpaid to them, not to the Fund or the Government. Fine under the penalty provision is additional.

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