CS Arvind Gaudana (Practicing Company Secretaries) Chapter-8 The Companies (Declaration and Payment of Dividend) Rules, 2014. 1. RELEVANT SECTION:- Section 123 to127 of the Companies Act, 2013. 2. DECLARATION OF DIVIDEND : u/s 123, Dividend shall be declare after providing depreciation, out of- • Out of Current year profit. • Previous year profit, if any. • Remaining undistributed profit. • Money provided by Central Govt. or State Govt. for the payment of Dividend. • Interim Dividend also permissinble from accumulated profit or Current year profit. • In case of Loss: NO HIGHER interim dividend of average of THREE F.Y. dividend. Provided, Before the declaration of any dividend in any financial year, transfer such percentage of its profits for that financial year as it may consider appropriate to the Reserves of the Company 3. IN CASE OF INADEQUACY OF PROFIT: Dividend may be declare out of accumulated previous year profit as per the provisions of the act.
CS Arvind Gaudana (Practicing Company Secretaries) 4. DECLARATION OF DIVIDEND OUT OF RESERVES: In case of inadequacy of profit, a Company may declare Dividend out of Surplus , subject to the fulfillment of the following conditions, namely:- • The rate of dividend declared shall not exceed the AVERAGE of the rates at which DIVIDEND was declared by it in the THREE years immediately preceding that year. • The total amount to be drawn from such accumulated profits shall not exceed one-tenth of the sum of its paid-up share capital and free reserves as appearing in the latest audited financial statement. Total Amount drawn <=1/10 th of (Paid up Share Capital+ Free Reserve) • These amount first be utilized to set off the losses incurred in the financial year in which dividend is declared. • The Balance of reserve after such withdrawal shall not fall below 15% of its paid-up share capital as appearing in the latest Balance Sheet. • Company shall declare dividend after-set off previous year losses and depreciation, whichever less , if any rest. Section 124: within 90days of transfer of funds, if any amount is unpaid, then place details on website of Company & CG website in prescribed format 5. UNPAID DIVIDEND ACCOUNT : u/s 124 provision of Unpaid & Unclaimed Dividend are following- Unpaid/Unclaimed dividend, if any, after expiry of 30days shall be transferred to special account to be opened in any Schedule bank to be called the UNPAID DIVIDEND ACCOUNT. With in 90days of such transfer make statement of containing the names, their last known addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if any, and also on any other website approved by the Central
CS Arvind Gaudana (Practicing Company Secretaries) Government for this purpose, in such form, manner and other particulars as may be prescribed. Default of transfer of any such amount to Unpaid Dividend Account, it shall pay interest 12% from the date of default. Provision for unpaid or unclaimed for a period of seven years from the date of such transfer • Transfer of these amount with interest, if any to IEPF. • The company shall send a statement in the prescribed form of the details of such transfer to the authority which administers the said Fund and that authority shall issue a receipt to the company as evidence of such transfer. • All shares in respect of which unpaid or unclaimed dividend has been transferred under sub-section ( 5 ) shall also be transferred by the company in the name of InvestorEducation and Protection Fund along with a statement. Provided that any claimant of shares transferred above shall be entitled to claim the transfer of shares from Investor Education and Protection Fund in accordance with such procedure and on submission of such documents as may be prescribed. • Non Compliance –punishable with fine -Minimum Rupees 5 lacs extendable to Rs. 25 Lacs - AND every officer, evolved in that punishable with fine Minimum Rs. 1 lacs extendable Rs. 5 Lacs. 6. U/S 127 default in posted of dividend warrant with in 30 days of Declaration punishable to Director of the Company, if he/she is knowingly in default, be punishable with imprisonment which may be extend to TWO years. AND with Fine, Minimum FINE Rs.1000/- everyday , during continuously of default.
CS Arvind Gaudana (Practicing Company Secretaries) AND the Company shall be punishable to pay Simple interest on this amount at 18% pa during the period for which such default continues. **************************************************
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