Insertion of new sections 28B and 28C

Section 142 of the Finance Act, 2021 deals with insertion of new sections 28B and 28C. Insertion of new sections 28B and 28C. 142.

Insertion of new sections 28B and 28C.

142. In the principal Act, after section 28A, the following sections shall be inserted, namely:—

"28B. Declaration of dividend.—(1) No dividend shall be declared or paid by the Corporation for any financial year except out of the surpluses and profits referred to in sub-section (2) of section 28 (after excluding any amount representing unrealised gains, notional gains or revaluation of assets and any change in carrying amount of an asset or of a liability on measurement of the asset or the liability at fair value) for such year arrived at after providing for depreciation, or for any previous financial year or years arrived at after providing for depreciation and remaining undistributed, or out of both the aforesaid surpluses and profits:

Provided that no dividend shall be declared or paid by the Corporation from its reserves other than free reserves:

Provided further that no dividend shall be declared or paid by the Corporation unless any losses carried over from previous years and any depreciation not provided for in previous years are set off against the surpluses and profits referred to in sub-section (2) of section 28 for the financial year for which the dividend is proposed to be declared or paid.

(2) The Board may, during any financial year or at any time during the period from the close of a financial year till the holding of the annual general meeting for that financial year, declare interim dividend out of the surpluses and profits referred to in sub-section (2) of section 28 of the financial year for which such interim dividend is sought to be declared, or out of the surpluses and profits referred to in sub-section (2) generated in the current financial year till the close of the quarter preceding the date of declaration of such interim dividend:

Provided that in case the Corporation has incurred loss during the current financial year up to the close of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average of the dividends declared by the Corporation during the immediately preceding three financial years.

(3) The amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in a separate account within five days from the date of declaration of such dividend.

(4) No dividend shall be paid by the Corporation in respect of any share of the Corporation except to the member in whose name such share is entered on the register of members referred to in section 5C, or to his order, or to his banker, and shall be payable in cash and not in stock or other form of value:

Provided that nothing in this sub-section shall be deemed to prohibit the capitalisation of the surpluses and profits referred to in sub-section (2) of section 28 for the purpose of issuing fully paid-up bonus shares or paying up any amount for the time being unpaid on any share held by members:

Provided further that any dividend payable in cash may be paid by cheque or warrant or in any electronic mode to the member entitled to such payment.

28C. Unpaid Dividend Account.—(1) Where a dividend has been declared by the Corporation but has not been paid or claimed within thirty days from the date of declaration to any member entitled to payment thereof, the Corporation shall, within seven days from the expiry of the said period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account to be opened by the Corporation in that behalf in any scheduled bank, to be called the Unpaid Dividend Account.

(2) The Corporation shall, within a period of ninety days of making any transfer of an amount under sub-section (1) to the Unpaid Dividend Account, prepare a statement containing the name and last known address of, and the amount of the unpaid dividend payable to, each member entitled to such unpaid dividend, and shall place such statement on its website and on any other website as the Central Government may specify.

(3) If any default is made in transferring the total amount referred to in sub-section (1) or any part thereof to the Unpaid Dividend Account, the Corporation shall pay, from the date of such default, interest on so much of the amount as has not been transferred to the said account, at such rate as is specified in section 124 of the Companies Act, and the interest accruing on such amount shall ensure to the benefit of the members in proportion to the amount remaining unpaid to them.

(4) Any person claiming to be entitled to any money transferred under sub-section (1) to the Unpaid Dividend Account may apply to the Corporation for payment of the money claimed.

(5) The amount remaining unclaimed and unpaid for a period of seven years from the date it became due for payment in the Unpaid Dividend Account shall be transferred to the Investor Education and Protection Fund established under sub-section (1) of section 125 of the Companies Act and shall be deemed to be an amount credited to the said Fund under sub-section (2) of the said section.

(6) All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the Corporation in the name of the Investor Education and Protection Fund along with a statement containing such details as may be prescribed:

Provided that every claimant of such shares shall be entitled to claim the transfer thereof from the said Fund in accordance with such procedure and on submission of such documents as may be prescribed.

Explanation.—For the removal of doubts, it is hereby clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to the Investor Education and Protection Fund.".

Section 142, The Finance Act, 2021.