MCA notifies effective date for implementation of provisions relating to Unpaid Dividend Account and Penalty [Read Notification]

MCA notifies effective date for implementation of provisions relating to Unpaid Dividend Account and Penalty [Read Notification]

MCA - implementation of provisions - Unpaid Dividend Account - Penalty - Taxscan

The Ministry of Corporate Affairs (MCA) appointed the 24th March 2021 for commencement of Section 23 and Section 45 of the Companies (Amendment) Act, 2020.

Section 23 of the Companies (Amendment) Act, 2020 seeks to amend the sub-section (7) of Section 124 of the Companies Act, 2013 and replaces the provisions of the said sub-section.

As per the amendment, if a company fails to comply with any of the requirements of this section, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of ten lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.

Section 124 of the Companies Act, 2013 deals with the Unpaid Dividend Account, and sub-section (7) of section 124 provides for the penalty in case of non-compliance of Section 124.

Earlier sub-section (7) of section 124 provides for fine of a minimum of Rs 5,00,000/- and maximum of Rs 25,00,000/- on the defaulting company and fine of minimum of Rs 1,00,000/- and maximum of Rs 5,00,000/- on the every officer of the company who is in default.

Section 45 of the Companies (Amendment) Act, 2020 seeks to amend Section 247 of the Companies Act, 2013.

In section 247 of the Principal Act, in sub-section (3), for the words “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees”, the words “liable to a penalty of fifty thousand rupees” shall be substituted.

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