Write notes on Punishment for failure to distribute dividend and exceptions.

Punishment for Failure to Distribute Dividend and Exceptions The Companies Act, 2013, imposes strict penalties on companies and their directors for failing to distribute declared dividends within the stipulated time, while also providing certain exceptions. Legal Provision: Section 127 of the Companies Act, 2013, deals with the punishment for failure to distribute dividends. 1. Punishment for Default: When a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder entitled to the payment of the dividend: For Every Director in Default: Every director of the company who is knowingly a party to the default shall be punishable with: Imprisonment which may extend to two years ; AND Fine which shall not be less than ₹1,000 for every day during which such default continues. For the Company: The company shall be liable to pay simple interest at the rate of eighteen percent per annum during the period for which such default continues. 2. Exceptions (No Offence Committed): The proviso to Section 127 specifies certain circumstances where no offence under this section shall be deemed to have been committed. These exceptions are: Operation of Law: Where the dividend could not be paid by reason of the operation of any law. (e.g., a court order freezing accounts). Shareholder's Directions: Where a shareholder has given directions to the company regarding the payment of the dividend, and those directions cannot be complied with, and the same has been communicated to him. (e.g., incorrect bank details provided). Dispute Regarding Right to Dividend: Where there is a dispute regarding the right to receive the dividend. (e.g., multiple claimants to the shares). Lawful Adjustment: Where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder. (e.g., calls in arrears). No Default by Company: Where, for any other reason, the failure to pay the dividend or to post the warrant within the period was not due to any default on the part of the company. (e.g., postal strike, natural calamity). These provisions ensure timely payment of dividends to shareholders while providing reasonable grounds for non-payment in unavoidable circumstances.