Opening separate account for Dividend

[Dipti Samant]

Dear Sir,

My co is private limited Company.

2 shareholders foreign entities.

1st entity holding 99 shares

2nd entity holding 1 share

Company is declaring div in upcoming meeting

Wheather  company needs to open separate bank account.

Received email from DEAUTHCHE BANK if you are paying within 5 days then do not open separate bank account but co. act 123(4) says about opening of separate bank account.

Can you please help on this.

 

Regards
Dipti Samant

[CA Rahul Srivastava]

Seperate Bank account is required.

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[Arun Kumar Maitra]

Yes you need to open a separate bank account unless the dividend is paid within five days of declaration.

CS CA Arun Kumar Maitra 

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[Namrita Shah]

Dear Sir

Could you please provide where it is written in law? 

Regards

CS Namrita Shah

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[Arun Kumar Maitra]

Under section.123(4) it's mandatory to open a separate Bank Account where dividends are to be deposited within five days from the date of declaration.

Now,if dividends are already paid within five days from the date of declaration it becomes redundant to open the above account.

Even then it's safe to open the account became some cheques may remain unchanged or unclaimed.Moreover, foreign shareholders need time for FEMA compliance.

CA CS Arun Kumar Maitra 

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[Arun Kumar Maitra]

Under section.123(4) it's mandatory to open a separate Bank Account ,where dividends are to be deposited within five days from the date of declaration.

Now,if dividends are already paid within five days from the date of declaration it becomes redundant to open the above account.

Even then it's safe to open the account because some cheques may remain unchanged or unclaimed.Moreover, foreign shareholders need time for FEMA compliance.

[Namrita Shah]

123(4) says "The amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in a separate account within five days from the date of declaration of such dividend." it does not say about non requirement of opening if paid within 5 days. 

Please enlighten!

Regards

CS Namrita Shah

Contact : 8802443163

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[Arun Kumar Maitra]

It has not been specially stated but opening of a separate Bank account becomes redundant if the dividend is already paid within five days.

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[Prahalad Kumar]

Dear all,

It is mandatory to open a separate bank account for the dividend, even if the company is in a position to pay immediately. According to Section 123(4), the requirement to deposit the dividend into a scheduled bank in a separate account within five days of declaration is a statutory obligation that must be fulfilled.

Regards,

CS Prahalad Kumar

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