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A listed company declared interim dividend on 31 August 2021, on the 25th anniversary of the company. It deposited the amount with an NBFC on 4 September 2021. This is:
ACompliant — depositing in any banking entity is OK
BNon-compliant — dividend amount must be deposited in a SCHEDULED BANK, not an NBFC
CNon-compliant — interim dividend can only be from current-year profits
DNon-compliant — only existing bank accounts can be used
Answer & Solution
Correct answer: B. Non-compliant — dividend amount must be deposited in a SCHEDULED BANK, not an NBFC
1. Rule 3 of Dividend Rules — amount of declared dividend must be deposited in a SEPARATE ACCOUNT of a SCHEDULED BANK within 5 days of declaration.
2. NBFCs are not scheduled banks for this purpose.
3. Hence (C).
_Source: ICAI BoS CA Inter Paper 2 — Declaration and Payment of Dividend_