Dividend has to be distributed within 30 days of the declaration. Posting of dividend warrants within 30 days will be deemed to be payment irrespective of the fact whether the warrant has been encashed or not. In case of joint holders the warrant has to be sent to the registered address of the first named joint holder or to such persona and to such address as the joint holders may in writing direct.
However, in the following circumstances dividend need not be paid within 30 days:
- Where dividend could not be paid by reason of the operation of any law, for example in the case of non-residents, dividend need not be paid within 30 days if permission for remittance where required has not been received therefore from the Reserve within 30 days
- Where a shareholder has given directions to the company regarding the payment of dividend and these directions cannot be complied with
- Where there is a dispute regarding the right to receive dividend
- Where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder
Where for any reason for failure to pay the dividend or to post the warrant was not due to any default on the part of the company.
To Whom Is Dividend Payed?
A dividend in respect of a share has to be paid to the registered shareholder of the share or to his order or to his bankers. For this purpose, usually companies close the register of members or fix a record date, of which 7 days notice should be given by publication of advertisement in two newspapers. The purpose of the such notice is to give an opportunity to those who hold blank transfer deeds to lodge them with the company duly completed. Dividend is paid to those whose names appear on the record date or the last day of the closure of register of members, as the case may be. The dividend is payable to the shareholder whose name appears in the register of members on the appropriate date even though prior to that date he has sold the shares and the transfer deed in respect thereof has not been lodged with the company.
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