Restriction on declaring Interim Dividend
Transfer to Reserves... made optional...
Step by step Flow chart for payment of Dividend...
Please read...
__________________________________________
Dividend
Chapter VIII of the Companies Act 2013 (Sec
123 – 127)
Draft Rules of the Companies Act 2013
Vs
Companies Act 1956 (Sec 205 – 206)
__________________________________________________________________________________
Applicability:
To all
Companies
Major Changes in
comparison with the Companies Act 1956:
-
The company shall not declare dividend so
long as the Company fails to repay the deposits accepted before the
commencement of the Act.
-
As per the new Act, no dividend shall be
declared or paid by the company from the reserves other than free reserves
-
There is no specific % of profit that is
specified to be transferred to the reserve. (Earlier it was 10%)
-
Payment of dividend to be made in cash only
and it can be made through electronic means also.
Sources of fund for
declaration of dividend:
- 1. Current year/ previous year profits of the
company after providing for depreciation and after transferring such sum to the
reserve, as may be deemed appropriate by the Company
- 2. Money provided by the Central Govt. or State
Govt. for payment of dividend.
Inadequacy of Profit*:
(On Referring Rules)
a. The rate
of dividend declared
|
≤ avg rate of dividend declared in the past 3
years immediately preceding that year
|
b. The
total amt drawn from accumulated profit
|
≤1/10th
paid up capital + free reserves
|
c. Balance
reserve after withdrawal
|
≥ 15% of
its paid up capital.
|
-
*Note:Whatever profits earned shall
first be utilized to set off losses and depreciation when dividend is being declared
in case of Inadequacy of Profits.
-
Point a.to be
fulfilled when the company incurs loss during the end of 1st quarter
immediately preceding the date of declaration of Interim dividend.
Dividend on shares to
be transferred (Transfer Deed received but not registered by the Company):
-
Unless the transferor gives in writing to pay
such dividend to the transferee the dividend shall not be paid.
-
The dividend on such shares shall be
transferred to the Unpaid Dividend Account, if unclaimed, in the respective
manner.
Shares transferred
back to the claimant:
-
The claimants shall make an application in
the respective format to get the shares transferred in their name from the Fund
account.
Registers to be
maintained:
-
Renewed and Duplicate share certificate
register
-
Share Transfer register
Penalty:
-
If the Company fails to pay the dividend or
post warrants thereof within 30 days from the date of declaration then every
DIRECTOR of the company who is in default shall be punishable
o
with imprisonment: upto 2 years + Fine Rs.
1000 or more for every day during which the default continues
o
The Company shall be liable to pay simple
interest at the rate of 18% p.a. during which the default continues.
Exemptions:
o
If Dividend was unable to be paid due to the
operation of law
o
Where a shareholder has given direction for
payment of dividend and it cannot be complied with
o
If the company has lawfully adjusted the
dividend against any sum due from the shareholder
o
Where any dispute regarding the right to
receive dividend exists
o
When there is no default on behalf of the
company
Sanka Indrani, Company Secretary
Achuthan R, Company Secretary
Note: This article is prepared by the authors, as a back grounder for the meeting conducted by Chennai West Study Circle on 15th March 2014
Note: This article is prepared by the authors, as a back grounder for the meeting conducted by Chennai West Study Circle on 15th March 2014
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