CMA Final · Corporate and Economic Laws · Dividends
Under Section 127, a company that fails to pay a declared dividend within thirty days is liable to pay simple interest at which rate per annum for the period of default?
The company is liable to pay simple interest at eighteen per cent per annum during the period for which the default in paying the declared dividend continues. Twelve per cent applies to liquidators under the liquidation account provisions, not to Section 127.
- ATwelve per cent
- BFifteen per cent
- CEighteen per centCorrect
- DTwenty-four per cent
Explanation
Section 127 makes the company liable to pay simple interest at eighteen per cent per annum during the period of default. Twelve per cent is the rate applicable to a liquidator retaining money under Section 352(8), so it is a wrong choice here.
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