According to section 207, it is obligatory for a company to pay dividend within 30 days of its declaration.
The term ‘to pay’ means posting of the dividend cheque or warrant. On default, every director who is knowingly a party to default is punishable with imprisonment which may extend to 3 years and with fine of Rs. 1,000 for every day if the default continues.
Default when excused:-
According to section 207, the default, is excused in the following cases:-
- Where dividend could not be paid due to operation of any law.
- Where the shareholder has given certain direction to the company regarding the payment of dividend which cannot be complied with.
- Where there is a dispute as to the recipient of dividend.
- Where the dividend has been lawfully adjusted against any sum due to the company.
- Where the failure to pay dividend or post the warrant within 30 days was not due to any default on the part of the company.
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