Any dividend payable in cash may be paid by check or warrant and it shall be deemed to have been paid when the check or warrant therefore is posted to the registered address or to such other address as provided by the shareholder entitled to the payment of dividend. So far as the company is concerned, the person entered in the Register of members is the holder of shares though he may be merely a fake having no beneficial interest in the shares for another person (a beneficiary).
“Dividend warrant” is an order by the company to its banker to pay the amount specified therein to the shareholder whose name is written therein. The shareholder may, at his discretion thereafter draw the amount of the warrant from his account with the bank and with whom he deposits the warrant for collection.
A company cannot take any notice of any private arrangement between the vendor and purchaser of shares. If a dividend warrant issued to but not received by a shareholder, is encashed by an unauthorized person directly or indirectly, the company will have to bear the loss, because in such cases the dividend cannot be said to have been paid to the registered holder.
For this reason, a warning note is printed on the reverse of the dividend warrant to save the company from the liability due to dividend warrant falling in hands of fraudulent persons.
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