Skip to content

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

Rohan, a shareholder of Delta Foods Ltd, has not received his declared dividend because the company claims the dividend was paid by cheque that was returned. Which of the following is a ground on which the company is NOT liable for the penalty or interest for non-payment of dividend within 30 days?

A company escapes liability for delay where the shareholder gave payment directions that cannot be complied with, where the right to receive is disputed, or where operation of law prevents payment. Cash shortage, absent directors or plans to retain funds are not valid excuses.

  1. AThe company's cash flow is temporarily weak
  2. BThe directors were out of the country for a month
  3. CThe shareholder has given directions regarding payment, and these cannot be complied withCorrect
  4. DThe company wishes to retain funds for capital expenditure

Explanation

The Act provides that the failure to pay within 30 days is excused where the shareholder has given directions regarding payment of the dividend and those directions cannot be complied with, or where there is a lawful dispute about the right to receive it, or where the dividend could not be paid due to operation of law. Financial weakness or director absence is no excuse.

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