Mr A holding 100 shares in XYZ company He has mandated the company to directly deposit the dividend ...........

Companies Act-Phase (I & II) Paymentofdividends

Mr. A, holding 100 shares in XYZ company. He has mandated the company to directly deposit the dividend amount in his bank account. The company accordingly remitted the dividend but bank returned the payment on the ground that there was difference in the surname of payee in bank records. The company, however, did not inform Mr. A about this discrepancy. In such situation:

Penal provisions against company will be applicable

No penal provisions against company will be applicable

Company will pay dividend in cash to the shareholder

None of the above

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Explanation:

Section 127 of Companies Act, 21013 provides for punishment for failure to distribute dividend in time. One of such situations is where a shareholder has given directions to the company regarding the payment of dividend and those directions cannot be complied with and same has not been communicated to the shareholder.

In given situation the company has failed to communicate to the shareholder Mr. A about non-compliance of his directions regarding payment of dividend. Hence the penal provisions under section 127 will be applicable.