This article is written by Ms Khushi Sarkhedi , a 1 year BA.LLB student from AURO university

Section 126 Companies Act 1956

126. Fee Notice Date. If any liability on the property of an enterprise required to be registered under section 125 is so registered, the person who acquires such property or any part thereof, or the interest thereof, shall recognize the liability on that date. shall be deemed to have been of such registration.  

This means that at the time the share transfer is unregistered or pending registration and the dividend is declared, the amount will be transferred to the unpaid dividend account as the registered member is entitled to the dividend. To do. However, that member has already been transferred. His shares are not endorsed by the company. However, if the transferor approves the company, this dividend may be paid to the transferee even if registration has not been met. 

Notwithstanding any other provision of this Act, if a share transfer deed has been filed with the company for registration and the transfer of those shares has not been registered by the company,

(a) unless the Company is authorized in writing by the registered holder of such shares to pay such dividends to the transferee named in such transfer deed, any dividend in respect of such shares shall be paid in accordance with Section 124; Send money to a dividend account.

(b) with respect to such shares, withholding the offering of rights shares under section (a) of subsection (1) of section 62 and the issuance of fully paid bonus shares under the first term of subparagraph; Section (5) of Section 123 .

The word “dividend” comes from the Latin “dividend”. Means something that needs to be shared. Dividend means a portion of the profit that a shareholder receives from the company’s net profit and can legally distribute to its members. A dividend is therefore a return on the share capital subscribed by a company and paid out to its shareholders. All shareholders are entitled to dividends on the record date, regardless of how long they have held their shares. For unlisted companies, the company may terminate membership registration in accordance with Article 91 of the Law. 

Dividends as defined in Section 2 (35) of the Companies Act 2013 include all interim dividends. Dividend :

Section 2 (35) of the Companies Act 2013 defines this period as including the interim dividend. Dividends are basically a portion of profits paid out to shareholders. The usual meaning of a dividend is a share of profits distributed to stockholders of a company, whether at a fixed rate or not. Dividends can be paid in both shares and preferred shares. The word “dividend” comes from the Latin “dividend”. Means something that needs to be shared. 

 To understand Section 126, one must first understand Section 56 of the Companies Act 2013. H. The Process of Transferring Shares of the Company.

Stock Transfer Procedures

Under Section 56 of the Companies Act 2013, a company may only register the transfer of securities (including shares) of the company if a proper deed of transfer on Form SH-4 has been executed between the transferor and the transferee. (if such securities are held); in physical form). The form must bear an official stamp of reasonable value, dated and signed by the transferor and transferee or by their representatives.

Form SH-4 will be sent to the company by the transferor or transferee within 60 days after signature. The Company shall register and issue the securities transfer deed within one month after receiving the transfer deed. 

Note: As described in Section 56, the Company has one month to register a physical share transfer. Section 126 therefore speaks of this one-month non-registration period  

Therefore, if a deed of assignment has been delivered to the company during that month but has not been registered by the company, the company will not assign such dividends or rights or bonuses if they have been declared by the company. increase. It is the amount in the unpaid dividend account and is not paid to shareholders. However, if the transferor authorizes the company in writing to pay dividends to the transferee named in the transfer deed (SH-4), the company will pay the dividends to the transferor.

Therefore, the company should be aware that it will pay dividends to the transferor only if the transferor has given the company permission in writing. 

Each transfer of shares is filed with the respective company for registration: 

The company will send dividends on these shares to an unpaid dividends account (US 124).

The registered holder of this stock shall in writing to pay this dividend to Transfer  as specified in this transfer deed.

62(1)(a) (temporary) suspension of offering rights in respect of such shares

Issuance of fully paid bonus shares in accordance with the first caveat of Section 123(5) 

Cancellation occurs if the current owner or owner does not declare a beneficiary. Instead, new owners are determined by the outcome of certain events at certain points in the future. Therefore, ownership of real estate, offices, or titles remains empty.  Example : Conditions not currently occurring or used: Hostilities between the two groups have been dormant since last June. The project will be put on hold until a funding agreement is reached .

Free share issuance conditions:

In India, delivery of shares to Demat account is his 2 days after trading date. All existing shareholders prior to the ex-date and record date are eligible to receive bonus shares issued by the company. However, company stock must be purchased by the ex-date to be eligible for bonus stock. 

Authority to hold unpaid/unclaimed dividends in a bank fixed deposit account

The Reserve Bank of India (RBI) allowed banks to open time deposit accounts to hold unpaid/unclaimed dividend balances of companies and pay interest on them. The above arrangements can be made by companies to earn interest on the amount of unpaid dividends. If it is desirable to open fixed deposit accounts with different amounts for each maturity and keep the appropriate amount of unpaid dividends in the form of a checking account so that reactivated or duplicated dividend coupons can be cashed there is. Bank during presentation. A fixed deposit account must also be opened under the name “ABC Limited Unpaid Dividend Account-2014 Fixed Deposit Account” and the amount deposited and interest earned on that amount will not be credited to other business accounts of the company. However, please note that the interest accrued/earned on the 7-year Unpaid Dividend Account will be transferred to the Central Government Investor Education and Protection Fund. 

Transfer of shares under section 124(6):

1. Transferred to the Fund shares, unclaimed dividends, security deposits, debentures, application for repayment or interest, proceeds from sale of fractional shares, redemption of preferred shares, etc.; stock .

Some important points to keep in mind:

I. The Management Board is responsible for declaring the amounts to be transferred to dividends and reserves.

ii. No objection may be made to the good faith decisions of the Board of Directors regarding dividends.

iii. Dividends must be declared and paid within 30 days.

IV. Dividends on shares can only be paid after dividends on preferred shares have been declared.

v. The dividend amount, including the interim dividend, will be deposited into the planning bank’s segregated account within five days of the dividend declaration date. 

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