Multiple Choice Questions
Chapter 6- Declaration and Payment of Dividend
Q1) ABC Ltd., a listed company proposed a dividend @ 15% on equity shares for the financial year ended on 31st March 2018. The Annual General Meeting (AGM) of the company was held on 15th July 2018 and the proposed dividend was approved and declared in the same. Due to some technical issues, dividend on 600 shares neither be paid within the time limit prescribed by the Act nor was transferred to unpaid dividend account. In such a situation which regulatory authority can take action against the company and its officers in default?
(a) Central Government
(b) SEBI
(c) Tribunal
(d) Investor Education and Protection Fund Authority
Q2) Shreyas Mechanics Limited owns a plot of land which was purchased long before. As the property rates are going up, it is decided to revalue the plot at fair value which is moderately ten times the original price, thus resulting in a revaluation profit of ₹ 20,00,000. The Board of Directors is keen to utilize ₹ 20,00,000 along with free reserves of ₹ 24,00,000 for declaration of dividend at the forthcoming Annual General Meeting (AGM) to be held on 28th September, 2019. Advise the company.
(a) ₹ 20,00,000 are to be excluded from the distributable profits as the same cannot be utilized towards declaration of dividend.
(b) Only 25% of ₹ 20,00,000 can be utilized as distributable profits towards declaration of dividend.
(c) Up to 50% of ₹ 20,00,000 can be utilized as distributable profits towards declaration of dividend.
(d) Up to 60% of ₹ 20,00,000 can be utilized as distributable profits towards declaration of dividend.
Q3) Sumitra Healthcare and Hospitality Limited had issued 9% non-convertible debentures which matured four years back. However, 1000 such debentures of ₹ 100 each are still remaining unclaimed and unpaid even after the maturity. State the period after which the company needs to transfer them to Investor Education and Protection Fund (IEPF) if they remain unclaimed and unpaid.
(a) After the expiry of five years from the maturity date.
(b) After the expiry of six years from the maturity date
(c) After the expiry of seven years from the maturity date
(d) After the expiry of eight years from the maturity date.
Q4) The Board of Directors of Vidyut Limited are contemplating to declare interim dividend in the last week of July, 2021 but the company has incurred loss during the current financial year up to the end of June, 2021. However, it is noted that during the previous five financial years i.e., 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21, the company had declared dividend at the rate of 8%, 9%, 12%, 11% and 10% respectively. Advise the Board as to the maximum rate at which they can declare interim dividend despite incurring loss during the current financial year.
(a) Maximum at the rate of 10%.
(b) Maximum at the rate of 11%.
(c) Maximum at the rate of 10.5%.
(d) Maximum at the rate of 11.5%.
Q5) Amount to be transferred to reserves out of profits before any declaration of dividend is ___________
(a) 5%
(b) 7.5%
(c) 10%
(d) at the discretion of the company.
Q6) The amount accumulated in the Investor Education and Protection Fund shall not be used for:
(a) refunds in respect of unclaimed dividends, matured deposits, matured debentures, application money due for refund and interest thereon.
(b) reimbursement of legal expenses incurred in pursuing class action suits under section 37 and 245.
(c) grants or donation to the Central Government for the purpose of investor’s education and training.
(d) distribution of any disgorged amount among eligible and identifiable applicants who have suffered losses.
Q7) Which of the following amount need not be credited to Investor Education and Protection Fund Account (IEPF)?
(a) Amount in unpaid dividend account (UDA) of company
(b) Amount of matured deposits with the company
(c) Profit on sale of asset
(d) Amount of matured debentures with the company.
Q8) The authorised and paid-up share capital of Avantika Ayurvedic Products Limited is ₹50.00 lacs divided into 5,00,000 equity shares of ₹10 each. At its Annual General Meeting (AGM) held on 24th September, 2019, the company declared a dividend of ₹ 2 per share by passing an ordinary resolution. Mention the latest date by which the amount of dividend must be deposited in a separate account maintained with a scheduled bank
(a) Latest by 29th September, 2019
(b) Latest by 4th October, 2019
(c) Latest by 9th October, 2019
(d) Latest by 24th October, 2019
Q9) The Directors of Silver tongue Solutions Limited proposed dividend at 18% on equity shares for the financial year 2018-2019. The same was approved at the Annual general body meeting held on 30th September 2019. Mr. Jagan was the holder of 2000 equity of shares on 31st March, 2019, but he transferred the shares to Mr. Rajiv on 8th August 2019. Mr. Rajiv has sent the shares together with the instrument of transfer to the company for registration of the shares in his favour only on 25th September 2019. The registration of the transfer of shares is pending on 30th September 2019. With respect to the dividend declared the correct action to be taken by the company is:
(a) Pay the dividend to Mr. Jagan
(b) Pay the dividend to Mr. Rajiv
(c) Transfer the dividend in relation to such shares to the Unpaid Dividend Account
(d) Transfer the dividend in relation to such shares to the Investor Education and Protection Fund.