ROC Imposes Penalty for Dividend Account Non‑Compliance [Read Order]
The adjudication order, issued under Section 454, underscores strict adherence to dividend distribution norms and shareholder protection.
![ROC Imposes Penalty for Dividend Account Non‑Compliance [Read Order]](https://images.taxscan.in/h-upload/2025/12/20/2113354-roc-imposes-penalty-dividend-account-non-compliance-taxscan.webp "ROC Imposes Penalty for Dividend Account Non‑Compliance [Read Order]")
The Registrarof Companies (ROC), Bangalore, has issued an adjudication order under Section 454 of the Companies Act, 2013, penalising a company and its director for violation of Section 123(4). The order, dated December 15, 2025, followed a suo motu application filed by the company acknowledging non‑compliance with dividend deposit requirements. Section 123(4) mandates that when...
The Registrarof Companies (ROC), Bangalore, has issued an adjudication order under Section 454 of the Companies Act, 2013, penalising a company and its director for violation of Section 123(4).
The order, dated December 15, 2025, followed a suo motu application filed by the company acknowledging non‑compliance with dividend deposit requirements.
Section 123(4) mandates that when a company declares a dividend, the amount must be deposited in a scheduled bank in a separate account within five days of declaration.
In this case, the company declared an interim dividend at its board meeting on March 4, 2025, but deposited the amount into its current account on March 5, 2025, instead of a separate dividend account. This lapse constituted a violation attracting a penalty under Section 450.
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The adjudication process involved issuance of show cause notices in July 2025, followed by replies submitted on the MCA’s e‑Adjudication portal.
The ROC noted that the company eventually provided compliance details, including board resolutions and bank statements, but the initial lapse rendered both the company and its officer in default liable for a penalty.
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In its order, the ROC imposed penalties of ₹10,000 on the company and ₹10,000 on director Anand Khandwala.
The order directs rectification of the default and payment of penalties within 90 days via the MCA’s e‑Adjudication portal, with the stipulation that the officer’s penalty must be paid personally. Appeals may be filed before the Regional Director, Hyderabad, within 60 days in Form ADJ, accompanied by a certified copy of the order.
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The ROC noted that the company does not qualify as a “small company” under Section 2(85), and therefore, the benefit of reduced penalty under Section 446B was not applicable. The ruling highlights the importance of strict compliance with dividend distribution norms, which are designed to safeguard shareholder interests and ensure transparency in corporate financial practices.
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