PPT: Declaration and Payment of Dividend | Corporate & Other Laws for CA Intermediate PDF Download

 Page 1


SECTION 407: Definitions
DECLARATION AND PAYMENT 
OF DIVIDEND
Page 2


SECTION 407: Definitions
DECLARATION AND PAYMENT 
OF DIVIDEND
Section 127 of Companies Act 2013, Penalty For Failure 
To Distribute Dividends.
Section 207
Companies Act 1956
Section 127 
Companies Act 2013
1. Three Years of imprisonment  to 
Directors And Penalty of Rs 1,000 Per 
Day On the Defaults.
2. As well the Company is Liable to Pay 
18% Simple Interest  Per Annum During 
the period for which Such defaults 
Continues
1. Two Years of imprisonment  to 
Directors And Penalty of
Rs 1,000 Per Day On the Defaults.
2. No Change.
***As the imprisonment of Directors were Reduced by One Year Compare 
to the Section 207 of Companies Act 1956.
Page 3


SECTION 407: Definitions
DECLARATION AND PAYMENT 
OF DIVIDEND
Section 127 of Companies Act 2013, Penalty For Failure 
To Distribute Dividends.
Section 207
Companies Act 1956
Section 127 
Companies Act 2013
1. Three Years of imprisonment  to 
Directors And Penalty of Rs 1,000 Per 
Day On the Defaults.
2. As well the Company is Liable to Pay 
18% Simple Interest  Per Annum During 
the period for which Such defaults 
Continues
1. Two Years of imprisonment  to 
Directors And Penalty of
Rs 1,000 Per Day On the Defaults.
2. No Change.
***As the imprisonment of Directors were Reduced by One Year Compare 
to the Section 207 of Companies Act 1956.
Section 127 of Companies Act 2013, Punishment For 
Failure To Distribute Dividends.
Where a dividend has been declared by a company but has not been paid or the
warrant in respect thereof has not been posted within thirty days from the date of
declaration to any shareholder entitled to the payment of the dividend, every
director of the company shall, if he is knowingly a party to the default, be punishable
with imprisonment which may extend to two years and with fine which shall not be
less than one thousand rupees for every day during which such default continues and
the company shall be liable to pay simple interest at the rate of eighteen per cent. per
annum during the period for which such default continues:
Provided that no offence under this section shall be deemed to have been
committed:—
(a) where the dividend could not be paid by reason of the operation of any law;
(b) where a shareholder has given directions to the company regarding the
payment of the dividend and those directions cannot be complied with and the same
has been communicated to him;
Page 4


SECTION 407: Definitions
DECLARATION AND PAYMENT 
OF DIVIDEND
Section 127 of Companies Act 2013, Penalty For Failure 
To Distribute Dividends.
Section 207
Companies Act 1956
Section 127 
Companies Act 2013
1. Three Years of imprisonment  to 
Directors And Penalty of Rs 1,000 Per 
Day On the Defaults.
2. As well the Company is Liable to Pay 
18% Simple Interest  Per Annum During 
the period for which Such defaults 
Continues
1. Two Years of imprisonment  to 
Directors And Penalty of
Rs 1,000 Per Day On the Defaults.
2. No Change.
***As the imprisonment of Directors were Reduced by One Year Compare 
to the Section 207 of Companies Act 1956.
Section 127 of Companies Act 2013, Punishment For 
Failure To Distribute Dividends.
Where a dividend has been declared by a company but has not been paid or the
warrant in respect thereof has not been posted within thirty days from the date of
declaration to any shareholder entitled to the payment of the dividend, every
director of the company shall, if he is knowingly a party to the default, be punishable
with imprisonment which may extend to two years and with fine which shall not be
less than one thousand rupees for every day during which such default continues and
the company shall be liable to pay simple interest at the rate of eighteen per cent. per
annum during the period for which such default continues:
Provided that no offence under this section shall be deemed to have been
committed:—
(a) where the dividend could not be paid by reason of the operation of any law;
(b) where a shareholder has given directions to the company regarding the
payment of the dividend and those directions cannot be complied with and the same
has been communicated to him;
Section 127 of Companies Act 2013, Punishment For 
Failure To Distribute Dividends.
(c) where there is a dispute regarding the right to receive the dividend;
(d) where the dividend has been lawfully adjusted by the company against any
sum due to it from the shareholder; or
(e) where, for any other reason, the failure to pay the dividend or to post the
warrant within the period under this section was not due to any default on the part 
of the company.