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Sec 127, Declaration n payment of dividend
Corporate & Other Laws
, I didn't understand this paragraph of sec 127 related to nidhi companies (for punishment of dividend) , is it like nidhi companies can do these 2 things (newspaper n notice) instead of issuing share warrants to members n instead of paying dividend to them? Or is there some other interpretation of this?
Answers (7)
It means that if Section 127 penalty is not applicable to nidhi Co. even after payment is not made in 30 days PROVIDED ALL these conditions are satisfied: 1. the dividend payable to a member is one hundred rupees or less, 2. declaration of dividend is announced in the local language in one local newspaper of wide circulation 3. and announcement of the said declaration is also displayed on the notice board of the Nidhis for at least three months. If any of these three conditions is not satisfied by Nidhi Co. then Section 127 will apply to delay in payment of dividend.
CA YOGITA HARJANI Faculty
It means that if Section 127 penalty is not applicable to nidhi Co. even after payment is not made in 30 days PROVIDED ALL these conditions are satisfied: 1. the dividend payable to a member is one hundred rupees or less, 2. declaration of dividend is announced in the local language in one local newspaper of wide circulation 3. and announcement of the said declaration is also displayed on the notice board of the Nidhis for at least three months. If any of these three conditions is not satisfied by Nidhi Co. then Section 127 will apply to delay in payment of dividend.
Alright but in such a case too, like nidhi company fulfilling all these 3 conditions, still it was the duty of nidhi company to give dividend to shareholders (even tho amount was very less, like <₹100, or even if it declared in newspaper and gave notice that it is declaring dividend), despite doing all this, still company is liable to release payment (make payment) of dividend to it's Share holders , and then if it doesn't, then penalty should be there. Then why are we allowing nidhi companies to not pay dividend even after declaring it (declaring in newspaper and notice won't cover up its fault of not paying it to member within 30 days)
Thread Starter
Garima BhargavaAlright but in such a case too, like nidhi company fulfilling all these 3 conditions, still it was the duty of nidhi company to give dividend to shareholders (even tho amount was very less, like <₹100, or even if it declared in newspaper and gave notice that it is declaring dividend), despite doing all this, still company is liable to release payment (make payment) of dividend to it's Share holders , and then if it doesn't, then penalty should be there. Then why are we allowing nidhi companies to not pay dividend even after declaring it (declaring in newspaper and notice won't cover up its fault of not paying it to member within 30 days)
Its a relaxation allowed to Nidhi Co. only if amount is small (100 or less). Its effective for their operation as its a non-banking financial institution
CA YOGITA HARJANI Faculty
Its a relaxation allowed to Nidhi Co. only if amount is small (100 or less). Its effective for their operation as its a non-banking financial institution
Okay, but dividend of almost every company is less than ₹100 per share nowadays as it's calculated on face value. Secondly isn't there any punishment for nidhi companies if they don't give dividend to it's members? How would shareholders receive dividend by Mere notice and ad in newspaper? Co. Will have to give it no? And if it doesn't, then there is no punishment also to it...
Thread Starter
Garima BhargavaOkay, but dividend of almost every company is less than ₹100 per share nowadays as it's calculated on face value. Secondly isn't there any punishment for nidhi companies if they don't give dividend to it's members? How would shareholders receive dividend by Mere notice and ad in newspaper? Co. Will have to give it no? And if it doesn't, then there is no punishment also to it...
(Updated)
1. Here Rs. 100 Dividend is not per share. It is total amount due on shares held by a member. 2. Only Section 127 penalty is relaxed. Other sections and penalties apply on Nidhi Co (Eg: Sec 124 Unpaid dividend Account)
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