Skip to content

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

Meridian Pharma Ltd. declared a dividend at its AGM on 10 July. The dividend warrants were not posted to shareholder Mr. Iyer, and the money was not paid within the statutory period. Which statement correctly states the legal position?

Dividend must be paid within thirty days of its declaration. If the company defaults, it must pay simple interest at eighteen percent per annum for the period of default. There is no 90-day period or compound interest rule, and waiting until the next AGM is not allowed.

  1. AThe company has 90 days from declaration to pay, with no interest for delay
  2. BThe company must pay within 30 days of declaration, and on default must pay simple interest at 18% p.a. during the period of defaultCorrect
  3. CThe company must pay within 30 days, and on default compound interest at 12% applies
  4. DThe company may pay at any time before the next AGM without liability

Explanation

Dividend must be paid within 30 days of declaration. If it is not, the directors are liable and the company must pay simple interest at 18% per annum during the period of default. The 12% compound option and the 90-day period are incorrect statements.

Did you get it right without looking?

One question tells you little. A timed set on Declaration and Payment of Dividend shows your real accuracy, how long you take and where you lose marks.

Practise Declaration and Payment of DividendFree diagnostic mock

More Declaration and Payment of Dividend questions