Dividend

Question 1

Conditions to be met before declaring dividend - Rule 3

Answer 1

1. Rate of dividend shall not exceed avg. rate of preceeding 3 FYs
2. Total amt. drawn shall not be more than 10% of PUSC+FR and such balance should be used to first set off any losses.
3. Balance in Reserve shall not fall below 15% of PUSC
   (Not applicable to 100% Govt. Co.)

Question 2

Punishment for failure to distribute dividend - Sec. 127

Answer 2

Director knowingly involved - Imprisonment upto 2 years AND Fine not less than ₹1,000 per day until default continues
Company - SI @18% p.a

Question 3

Exceptions to Sec. 127 (Punishment for failure to distribute dividend)

Answer 3

(LADDO)
1. By operation of Law
2. Lawfully Adjusted against any amt. receivable by the SH
3. Dispute regarding right to receive dividend
4. SH - Gave Directions –> Co. couldn’t comply —> Communicated the same to SH
5. Any Other reason