CMA Final · Corporate and Economic Laws · Dividends
Which of the following situations means NO offence is deemed committed under Section 127 for non-payment of a declared dividend within thirty days?
No offence arises where the dividend has been lawfully adjusted against a sum due to the company from the shareholder. This is a listed exception in the proviso to Section 127. Fund shortage, oversight or foreign residence are not exceptions.
- AThe company had temporary shortage of funds
- BThe directors forgot to issue the warrants
- CThe dividend was lawfully adjusted against a sum due to the company from the shareholderCorrect
- DThe shareholder lives abroad
Explanation
The proviso to Section 127 lists exceptions, including where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder. Cash shortage, oversight or foreign residence are not listed and are not defaults 'not due to the company'.
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