In pvt company just approve the Final Dividend in AGM and credit same to the shareholders.

First of all Directors must have recommended the Dividend in the Board Meeting.

Then in AGM, shereholders have approved the same. The rate must not be higher than what the directors have recommended. However, it may be lesser than the same.

Then arrange to deposit the amount of dividend to a specific bank account, for this purpose only, within 5 days of its declaration.

Then arrange to send cheques to the shareholders.

The dividend must be distributed within 30 days of the declaration.

Any amount remains unpaid/ unclaimed in the dividend account after the expiry of 30 days must be transferred to Unpaid Dividend account for the year Account of the Company within 7 days of the expirty of  that 30 days.

Any amount remains unpain in unpaid dividend account for a period of 7 years must be  transferred to IEPF account.

There is no difference in dividend distribution in case of public company or private company.

However, in case of Listed Public company there are some intimations and compliance also required.

First of all Directors must have recommended the Dividend in the Board Meeting.

Then in AGM, shereholders have approved the same. The rate must not be higher than what the directors have recommended. However, it may be lesser than the same.

Then arrange to deposit the amount of dividend to a specific bank account, for this purpose only, within 5 days of its declaration.

Then arrange to send cheques to the shareholders.

The dividend must be distributed within 30 days of the declaration.

One point skipped.......

Dividend Tax must be paid within 14 days fo the declaration of the same.

Dear Ankur Sir,

What is the procedure to pay dividend tax?

Is it compulsory to close the register of members if it is closely held pub co.

How the procedure for record date is to be completed?

Is it compulsory to pay dividend by dividend warrants or only issuance of cheque will be sufficient compliance?

Regards,

Pooja

Originally posted by : CS Pooja
	Dear Ankur Sir, What is the procedure to pay dividend tax? Is it compulsory to close the register of members if it is closely held pub co. How the procedure for record date is to be completed? Is it compulsory to pay dividend by dividend warrants or only issuance of cheque will be sufficient compliance? Regards, Pooja

Dear Pooja,

In case of closely held public companies you may go for Record Date. If you opt for Book Closure you have to comply with section 154 and accordingly publish notice in newspaper.

Just decide the record date and pass Board Resolution for the same.

You may also issue at par cheques for the dividends.

If i don't opt for bok closure then will it be non compliance of companies act?

Please provide me board resolution for record date.

Please confirm whether record date has to be date after the date of AGM or before the date of AGM?

Which banks are elegible for Opening Account for dividend?

What is practical procedure for payment of Dividend Distribution Tax?

Regards,

Pooja

You may also pay the dividend through ECS but you have to obtain ECS mandation and complete account details from the shareholders.

The dividend must be paid, at par, within 30 days of its declaration.

Sir please reply for my latest query.

Originally posted by : CS Pooja
	If i don't opt for bok closure then will it be non compliance of companies act? Please provide me board resolution for record date. Please confirm whether record date has to be date after the date of AGM or before the date of AGM? Which banks are elegible for Opening Account for dividend? What is practical procedure for payment of Dividend Distribution Tax? Regards, Pooja

Dear Pooja,

No, it is not non compliance. Only in case of listed companies it is necessary to close the transfer books and the register of members once in a year. Otherwise for other companies it is not necessary. However, for entilement of dividend you have to either close the book or decide the record date. Therefore, for closely held companies it is expedint to opt for record date.

I personally do the same for various unlisted companies.

Draft Board Resolution for Record Date:-

RESOLVED THAT 24th May, 2011 be and is hereby fixed as the Record Date in view of ensuing Annual General Meeting and deciding the entitlement of Dividend, if any.”

Record date is the date on which the entitlement of dividend is to be decided. Therefore, It should be on or before or after the date of AGM. AFter declarion of dividend if you decide the entitlement then there may be changes that the share might be purchased for dividend only.

You can open dividend account with any of the Bank.

Dividend distribution tax is to be paid online in challan no. 280.

 GUIDELINES FOR E-PAYMENT

The CBDT vide its Notification No. 34/2008 dt. 13.03.08 has inserted rule 125 to Income tax Rules, 1962 which provides that all companies are required to make payment of tax electronically on or after 01.04.2008.

Payment of tax shall include all type of income tax, TDS, Fringe Benefit tax, Dividend Distribution Tax including interest and penalty.

For making payment of tax electronically, each company or unit is required to have bank account with Internet banking facility of authorized bank. List of authorized banker is enclosed.

Payment of tax can be made at the following site:

            www.incometaxindia.gov.in

The procedure of E-Payment shall be as under:

1.                  You are required to open the any of the website and select the option ‘Pay taxes online’.

2.                  The relevant challan is to be selected i.e. ITNS 280 ( Income tax/ Wealth tax) or ITNS 281 (TDS/TCS Payment)  or ITNS 282 (Interest tax/ Expenditure tax) ITNS 283 (Fringe Benefit Tax) as applicable.

3.                  Enter PAN/ TAN as applicable. There will be an online check on the validity of PAN/TAN entered.

4.                  If PAN/TAN is valid than other challan detail is required to be filled

5.                  On submission of data entered a confirmation screen will be displayed. On confirmation the data entered in the challan, it will be directed to the net banking site of the authorized bank.

6.                  You are required to login to the net banking site with the user id/ password provided by bank for net banking purpose and enter payment detail at the bank site.

7.                  On successful payment a challan counterfoil will be displayed containing CIN, payment detail and bank name through which e-payment has been made. Copy of this counterfoil is kept for evidence of payment made.