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CS Executive · Company Law and Practice · Distribution of Profits

Veda Textiles Ltd has a bank balance of Rs 40 lakh after declaring a final dividend at its annual general meeting. The company secretary asks by when the dividend amount must be deposited in a separate account with a scheduled bank. Under the Companies Act, 2013, what is the time limit?

The dividend amount, including any interim dividend, must be deposited in a separate account with a scheduled bank within five days from the date of its declaration. The period runs from declaration, not from the financial year end or the meeting notice.

  1. AWithin five days from the date of declarationCorrect
  2. BWithin thirty days from the date of declaration
  3. CWithin fifteen days from the date of declaration
  4. DWithin five days from the date of closure of the financial year

Explanation

Section 123(4) requires the dividend amount, including interim dividend, to be deposited in a scheduled bank in a separate account within five days from the date of declaration. Thirty days is the period for filing beneficial interest returns, not for depositing dividend.

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