dividend deposit within five days reg.

[yoganand l]

as per s.205(1A), interim dividend shall be deposited within five days of declaration;

can some one kindly advise whether this period is inclusive / exclusive of public holidays ??

 

this is because our board meeting took place on thursday,

in AP, friday is a holiday due to ugadi

saturday is only half day for banks (and account opening is not possible)

sunday is again a holiday

 

so we literally lost three days here

and it is seeming almost impossible to open the account in the next two days time

dividend can be deposited only after the account is opened.. right

 

so how do i tackle the situation,

can some one pls. guide.

 

the section doesnt talk of five working days, it only says five days

 

 

regards,

yogan.

[MVK MVK]

Dear Yoganand,

You are right in observing that the Act mentions  "days" and not "working days". Hence, we have to take calendar days only and as far as our understanding goes, there is no solution for this.

But, nowadays some Banks do open accounts within 24 hours, depending on proper KYC documentations and rapport between the company and the Banker.

If the account is not opened within 5 days and eventually the dividend amount is not deposited, general penalty u/s 629A will be attracted, since Section 205 does not specify penalty. The company may go for compounding u/s 621A after the dividend payment is over, .

Normally companies would know the fact of declaration of dividend atleast 1-2 days before the Board Meeting and this will enable the secretarial department to keep ready the dividend a/c beforehand.

Members' views solicited.

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[vivekhe...@gmail.com]

Dears,

I think we should take it as 5 working days.... that is logically correct also.... act should not expect us to do impossible things and compound the offence later..

Further if you go to some of the RBI circulars relating to payment of dividend you find it as 5 working days..

Sent from my HTC

[yoganand l]

thank you very much for your emails. can you please help me finding the rbi circulars that used the term 'working'

 

further, opening of dividend account before boad meeting doesnt seem to be logically correct; as the directors might not prefer declaring any dividend though it is included as one of the agenda items

 

this problem doesnt arise for declaration of dividend at agms

as the directors recommend dividend to the shareholders only for a formality of declaration.

 

adjourning of the dividend item is also not practically possible in the case of a formal board meeting

as bankers insist for a resolution for opening & declaration of dividend accounts

 

regards,

yogan.

[Ramaswami Mohan]

pl see this web link:  http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6937&Mode=0

Dividend payments on equity shares held by QFIs can either be directly remitted to the designated overseas bank accounts of the QFIs or credited to the single rupee pool bank account. In case dividend payments are credited to the single rupee pool bank account they shall be remitted to the designated overseas bank accounts of the QFIs within five working days (including the day of credit of such funds to the single rupee pool bank account). Within these five working days, the dividend payments can be also utilized for fresh purchases of equity shares under this scheme, if so instructed by the QFI. 

regards,

Mohan

[Vivek Hegde]

Please find the RBI circular which uses the term 'working'

[vivekhe...@gmail.com]

[MVK MVK]

Dear Yoganand / Vivek hegde,

1. Regarding "days" / "working days": According to the rule of interpretation, unless Law specifically mentions something, such thing shall not be implied. In our case, "days" have been mentioned and hence, "working days" shall not be implied.  If "days"  is considered as "working days", then we should also take 21 working days for notice of GM; rather we take calendar days. It may also be observed that in RBI regulations, SEBI regulations...etc "working days" have been specifically mentioned. Where it is not specifically mentioned, (like Companies Act), we shall consider calendar days only.  

2. Regarding opening of dividend a/c: We were supposed to mention that "...this will enable the secretarial department to keep ready the documents for dividend a/c beforehand." (clerical errror)

Member's views solicited.

[CS A Rengarajan]

Act is very clear we should within 5 days. We should go as per
companies act rather than sebi and rbi

[(1A) The Board of directors may declare interim dividend and the
amount of dividend including interim dividend shall be deposited in a
separate bank account within five days from the date of declaration of
such dividend

regards

On 3/25/12, MVK MVK <mvk....@gmail.com> wrote:
> Dear Yoganand / Vivek hegde,
>
> 1. Regarding "days" / "working days": According to the rule of
> interpretation, unless Law specifically mentions something, such thing
> shall not be implied. In our case, "days" have been mentioned and hence,
> "working days" shall not be implied. If "days" is considered as "working
> days", then we should also take 21 working days for notice of GM; rather we
> take calendar days. It may also be observed that in RBI regulations, SEBI
> regulations...etc "working days" have been specifically mentioned. Where it
> is not specifically mentioned, (like Companies Act), we shall consider
> calendar days only.
>
> 2. Regarding opening of dividend a/c: We were supposed to mention that
> "...this

> will enable the secretarial department to keep ready the *documents
> for *dividend

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[yoganand l]

keeping aside the relation the company has with the bank, what stand would i take to open a "xyz ltd - second interim dividend (2011-12) account"
what resolution should i give them for opening of the account

kindly suggest..

regards,
yogan.

On Sun, Mar 25, 2012 at 9:11 PM, AnkurSri <anks...@yahoo.co.in> wrote:

 

Dear Yogan,

 

The dividend has to be transferred within 5 days of declaration, so nothing stops you from opening a bank account before hand or completing the formalities for opening of bank account.

 

Hope your company will have a good relation with bank, if so they will open the Bank account in a day also.

 

 

Regards,

 

  Ankur Srivastava

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