Query on Credit of dividend in separate bank account

[Ashish Aggarwal]

Dear all

I have a small query on the credit of dividend to a separate bank
account in terms of section 205(1A). As stated dividend needs to be
credited within 5 days from the date of declaration of dividend.

If the 5th day is a sunday, can a company legitimately transfer the
funds on monday which happens to be 6th day.

I request you to back the answer with any precedent in your
organisation or backed by any case law available on it.

thanx in advance

regards,

Ashish Aggarwal
+919650990300

--
Ashish Aggarwal

[Narayan S]

The section does not mention as 5 working days. So you need to transfer before Sunday to ensure compliance.

 

Regards

S.Narayan

--
Find eNewsletters of ICSI Mysore at: http://www.icsi.edu/NewsEvents/enewsletters/tabid/1757/Default.aspx  AND www.esnips.com/web/icsimysore

You received this message as you are subscriber. To unsubscribe email to: csmysore-u...@googlegroups.com

--
Regards
S.Narayan

[Dipak singh]

yes I agree with Mr.Narayan.

regards,
Dipak Singh

[esha sharma]

Section says:
²[(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.

I think as we take the next day if its a public holiday, so we can take Monday as in your case for calculating 5 days period

--

[Ashish Aggarwal]

Choosing between monday and Saturday involve a financial implication
of more than Rs.20 lacs (being call money interests). So I request you
to pls back ur answers wid any case law or practical experience.

On 5/2/11, esha sharma <esha...@gmail.com> wrote:
> Section says:
> *2*[(1A) The Board of directors may declare interim dividend and the amount

--
Ashish Aggarwal

[Roshni Agrawal]

Dear Member,

Holidays are included in provision of 5 days. If holidays are excluded the Act would say within 5 working days. Also if u see, notice of AGM specifies 21 days, it includes all holidays. Companies Act does not recognise the concept of working days.

 

Ideally the funds should be transferred on Saturday. But even if the funds are transferred on Monday and there is a subsequent query from ROC the company should be able to demonstrate that free funds were available with it and due to intervening sunday the same were credited on monday. Even if the auditor mentions the fact in Notes to accounts, the same fact should be stated therein. However, most important is that free funds should have been available. Free funds means funds without any lien.

 

N if the case is " eg 3 holidays comes in mid of counting those 5 days"- 

Then in such a case plan in advance, or alternatively get the documents compiled to present to auditors/statutory authority explaining that free funds were available and due to banking holidays the company was prevented from complying the time limit of 5 days and immediately upon opening of banks the compliance was made.

 

Thanks & Regards

[Sandeep kumar]

Very nice opinion by u Roshni mam..

Sandeep Kr. Mishra
Company Secretary

Nature is dynamic, Change is the Law of Nature....

[shailesh goyal]

well said Ms. Roshni...well in continuation to above query i would also like to raise one related quety ie. if company pay dividend within 5 days of declaration of dividend by way of cash, then i suppose there is no need to deposit the amount in seperate bank account.

Secondly what are the consequences if dividend cheques are issued to shareholders from company's CURRENT ACCOUNT????

Regards
Shailesh Goyal