Question

Explain the Legal provision regarding payment of dividends?

Answer 1

1. The Dividend may be paid to—

• The registered holder of a share or to his order or to his bankers or
• To a bearer of share-warrant or to his bankers.

2. The company pays dividends in proportion to the amount paid upon each share.
3. The dividend shall be paid at cash.
4. A company cannot pay a dividend on advance payment of calls.
5. If the dividend is not paid within 30 days or dividend warrant is not posted within 30 days from its declaration, every director i default will be punishable with simple imprisonment for a term of 3 years and shall also be liable to a fine of Rs 1000/- day during the period of default. The company shall be liable to pay simple interest at 18% p.a. during the period for which default continues.
6. Dividend on preference shares is fixed by the Articles of Association and is to be paid accordingly.