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

Meera Gupta, a shareholder of Zenith Ltd., has not received a dividend declared by the company. The company's records show the dividend was declared validly, and the dividend warrant was posted to her registered address, but it was lost in transit. Nothing else prevents payment. Which view reflects the correct position?

The company must still pay Meera because a declared dividend is a debt owed to the shareholder until actually paid. A warrant lost in transit does not discharge it, and failure to pay within 30 days brings the interest and Unpaid Dividend Account consequences.

  1. AThe company has no further liability since the warrant was posted
  2. BThe company must still pay Meera, as the declared dividend remains a debt owed to her until it is actually paid, and delay can attract interestCorrect
  3. CMeera's right to the dividend ends after 30 days
  4. DThe dividend must be forfeited and added to the reserves

Explanation

A declared dividend becomes a debt due from the company to the shareholder. Posting a lost warrant does not discharge it; if not paid within 30 days, interest and the Unpaid Dividend Account provisions apply. The right does not end after 30 days, nor is the amount forfeited into reserves.

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