Article

“Synopsis on SS 3”
“Chahat Jain”

Corporate Law Services Division

corplaw@vinodkothari.com
“05 January 2018”

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 “Synopsis on SS 3”
Article

A Comparative Study of SS 3 - Secretarial Standard on

Dividend

Preamble
This Standard is issued by the Institute of Company Secretaries of India in November
2017 in relation to declaration and payment of dividend and matters related thereto.
The Standard is recommendatory & applicability of this standard is Voluntary to every
company and specifically exempts company limited by guarantee not having share capital
and does not deal with Dividend, if any, declared by companies under liquidation and is
effective from 1st January, 2018.

Detailed Tabular analysis of the Standard with the Provisions of the Companies Act, 2013
and Listing Regulations along with remarks if any, is mentioned below:

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
1 “Dividend” means a distribution As per clause 35 of Section 2, No conflict SS 3 clearly spells
of any sums to Members out of Dividend includes any interim out what is
profits dividend Dividend, Final
and wherever permitted out of Dividend and
free reserves available for the No specific definition for Interim Dividend
purpose. Preference Shareholder and whereas there is no
Shareholder specific definitions
“Final Dividend” means the for the same in the
Dividend recommended by the Act.
Board of Directors and declared
by the Members at an Annual
General Meeting. SS also terms out
Preference
“Interim Dividend” means the Shareholder and
Dividend declared by the Board Shareholder
of
Directors.

“Preference Shareholder” means

 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
a holder of such shares which
carry a preferential right, in
respect of payment of Dividend,
of a fixed amount or an amount
calculated at a fixed rate and in
respect of capital, to repayment
of capital.

“Shareholder” means a Member

as defined above and, where the
context requires or admits,
includes a Preference
Shareholder.

2 1.1.2 As per sub section 6 of Section No Conflict Where the act

A company shall not declare 123, A company which fails to prohibits the
Dividend on its equity shares in comply with the provisions of declaration of
case of non-compliance of sections 73 and 74 shall not, dividend only in
provisions relating to the so long as such failure case of failure of
acceptance of deposits under the continues, declare any compliance of
Act, till such time the deposits dividend on its equity shares. Section 73 and 74,
accepted have been repaid with the SS 3 extended to
interest in accordance with the default in
terms and conditions of the
agreement entered with the (a) Redemption of
depositors. debentures or
A company shall also not payment of interest
declare any Dividend, if it thereon or creation
hasdefaulted in – of debenture
(a) Redemption of debentures redemption
or payment of interest reserve,
thereon or creation of
debenture redemption (b) Redemption of
reserve, preference shares or
(b) Redemption of preference creation of
shares or creation of capital redemption
capital redemption reserve, reserve,
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
(c) Payment of Dividend
declared in the current or (c) Payment of
previous financial year(s), or Dividend declared
(d) Repayment of any term in the current or
loan to a bank or financial previous financial
institution or interest thereon, year(s), or
till such time the default is
subsisting. (d) Repayment of
No Dividend shall be declared any term loan to a
by the company during bank or financial
the extended time, if any, institution or
granted by the interest thereon,
Tribunal/Courtfor repayment till such time the
of above liabilities. default is subsisting.

In addition to the
above, SS 3 also
specifies that No
Dividend shall be
declared by the
company during the
extended time, if
any, granted by the
Tribunal/Court for
repayment of above
liabilities.

3 1.1.3 As per third proviso of sub No Conflict SS 3 has elaborated

Dividend shall not be declared section 1of Section 123 of the the ways other than
out of the Securities Premium Act, free reserve out of
Account or the Capital No dividend shall be declared which dividend shall
Redemption Reserve or or paid by a company from its not be declared.
Revaluation Reserve or reserves other than free
Amalgamation Reserve or out of reserves: The Act kept it
profits on re-issue of forfeited concise.
shares or out of profits earned
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
prior to incorporation of the
company.

4 1.1.4 As per proviso to sub section No Conflict SS 3 puts more

While declaring the Interim 3 of Section 123 of the Act, in clarity on points to
Dividend, the Board shall case the company has consider while
consider the financial results for incurred loss during the declaring interim
the period for which Interim current financial year up to dividend.
Dividend is to be declared and the end of the quarter
should be satisfied that the immediately preceding the Clause (e) of the
financial position of the date of declaration of interim para 1.1.4 of the SS
company justifies and supports dividend, such interim 3 is same as in sub
the declaration of such Dividend. dividend shall not be declared rule 1 of rule 3 of
The financial results shall take at a rate higher than the Companies
into account – average dividends declared by (Declaration and
(a) depreciation for the full year, the company during the Payment of
(b) tax on profits of the immediately preceding three Dividend) Rules,
company including deferred tax financial years. 2014
for full year,
(c) other anticipated losses for
the financial year,
(d) Dividend that would be
required to be paid at the fixed
rate on preference shares.
(e) the losses incurred, if any,
during the current financial year
upto the end of the quarter,
immediately preceding the date
of declaration of Interim
Dividend.

Further, in case of clause (e)

above, Interim Dividend shall
not be declared at a rate higher
than average Dividend declared
during the immediately
preceding three financial years
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS

5 1.1.5 No such related provision No conflict SS 3 has focused on

Where a company has issued dividend to be paid
equity shares with differential in respect of
rights as to Dividend, Interim shares with
Dividend may, at the option of differential rights.
the Board, be declared on all or
any one or more of the classes of It has also set out a
such shares in accordance with limit up to which
the terms of issue. when interim
In case Interim Dividend is dividend is declared
declared on only one class of on only one class of
equity shares, the Board shall share.
ensure that the profit as shown
in the financial results is
adequate to meet the Dividend
that would have to be paid on
the other classes of equity
shares in accordance with the
terms of issue.
Where a company has issued
equity shares with differential
rights as to voting only, no
differentiation shall be made in
the declaration of Interim
Dividend on such shares, unless
the terms of issue provide
otherwise.

6 1.2 As per Rule 3 of Companies No conflict The SS in respect of

In a year in which the profits are ( Declaration and Payment of declaration of
inadequate or there are no Dividend) Rules, 2014 dividend out of
profits, the company may In the event of inadequacy or reserves is same as
declare Dividend out of Free absence of profits in any year, provided in the
Reserves subject to the a company may declare Rules, but SS 3 here
fulfillment of the following dividend out of free reserves exempts
conditions: subject to the fulfillment of Government

S.No Relevant Para under SS 3
(a) The rate of Dividend
declared by the company shall
not exceed the average of the
rates at which Dividend was
declared by it in the three
financial years immediately
preceding the financial year of
declaration of Dividend. This
shall not be applicable where a
company has not declared any
Dividend in each of the three
preceding financial years.
(b) Total withdrawal from the
accumulated profits shall not
exceed one tenth of the sum of
the paid up share capital and
free reserves of the company as
per the latest audited financial
statements. (c) The amount so
withdrawn shall first be utilised
to set off the losses, if any,
incurred in the financial year in
which Dividend in respect of
equity shares is proposed to be
declared.
(d) The balance of Free
Reserves after such withdrawal
shall not fall below 15% of the
paid up share capital of the
company as per the latest
audited financial statements.
The above conditions shall not
apply to a Government
Company in which the entire
paid up share capital is held by
the Central Government or
“Synopsis on SS 3”
Article
Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
the following conditions: Company in which
(a) The rate of Dividend the entire paid up
declared by the company shall share capital is held
not exceed the average of the by the Central
rates at which Dividend was Government or
declared by it in the three State
financial years immediately Government(s) or
preceding the financial year of jointly by both to
declaration of Dividend. This comply with the
shall not be applicable where said requirement of
a company has not declared SS 3.
any Dividend in each of the
three preceding financial It is the matter of
years. inconsistency, as the
(b) Total withdrawal from the Act and rule is not
accumulated profits shall not providing any
exceed one tenth of the sum of exemption to the
the paid up share capital and above-mentioned
free reserves of the company company as
as per the latest audited mentioned in SS 3,
financial statements. the Act will prevail.
(c) The amount so withdrawn
shall first be utilised to set off
the losses, if any, incurred in
the financial year in which
Dividend in respect of equity
shares is proposed to be
declared.
(d) The balance of Free
Reserves after such
withdrawal shall not fall
below 15% of the paid up
share capital of the company
as per the latest audited
financial statements.
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
State Government(s) or jointly
by both.

7 1.2.2 No Conflict As per Companies

Interim Dividend shall not be Act 2013, Dividend
declared out of Free Reserves. includes interim
In the event of a loss or dividend.
inadequacy of profits during a
financial year, no Interim Rule 3 of Companies
Dividend shall be declared/ paid (Declaration and
out of Free Reserves. However, Payment of
Final Dividend may be declared Dividend) Rules,
paid out of Free Reserves subject 2014 dictates the
to the conditions set out in declaration of
paragraph 1.2.1 above. Dividend out of
reserves.
As no clear
distinction is made
between final
dividend and
interim dividend,
the Rule shall be
applicable on
declaration of
interim dividend out
of reserves.

But the SS 3
prohibits the
declaration of
Interim Dividend
out of reserves.

However, the SS 3
here is more
stringent, it should
be followed.
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS

8 2.1 No definite provision. No Conflict Though there is no

Dividend shall be declared only specific provision
on the recommendation of the Final Dividend is generally related to
Board, made at a meeting of the declared at an annual general declaration and
Board. Unless the Dividend has meeting [Section 102(2))] at a payment of
been recommended by the rate not more than what is unconditional
Board, Members in Annual recommended by the dividend, a circular
General Meeting cannot on their directors. of DCA dated 13-04-
own declare any Dividend. 1998 acts as a
In accordance with Section guidance note for
Where a company has an Audit 134(3)(k), Board of directors interpretation for
Committee, this Committee shall must state in the Directors’ the provisions in the
consider the annual financial Report the amount of 2013 Act which
statements before submission to dividend, if any, which it states that the
the Board. Dividend shall be recommends to be paid. declaration of
recommended by the Board dividend should be
after consideration and approval unconditional and
of said financial statements. that they should not
declare dividends
All requisite approvals shall be subject to any
obtained before declaration of conditions. They
Dividend. Dividend shall not be should take prior
declared subject to any condition approval from
such as the approval of financial financial
institutions/ banks or foreign institutions/banks
collaborators or compliance with wherever required
any other contractual obligation. before declaration.

Therefore, it is
recommendable to
declare any
dividend
unconditionally and
all the requisite
approvals should be
taken prior to the
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
declaration.
9 2.2 As per Section 102(2) No Conflict The dividend
Dividend shall be declared only declaration of dividend is an recommended by
at an Annual General Meeting. ordinary business to be the Board of
transacted at the annual directors in the
Dividend shall relate to a general meeting. Board’s Report must
financial year and shall be be ‘declared’ at the
declared by the Members at the annual general
Annual General Meeting of the meeting of the
company after adoption of the company. This
financial statements of the constitutes an item
company. of ordinary business
to be transacted at
Members may declare a lower every annual
rate of Dividend than the rate general meeting.
recommended by the Board but
have no power to increase the
amount or rate of Dividend In the case of
recommended by the Board. Maharani Lalita
Rajya Laxmi v.
The Members may also decide Indian Motor Co.
not to declare the Dividend (Hazaribagh) Ltd.
recommended by the Board. The (1962) final
Dividend, if declared, should be dividend for any
disclosed on per share basis financial year can be
declared and paid
only when the
balance sheet and
profit and loss
account are
presented to the
shareholders at the
annual general
meeting, and the
shareholders after
consideration of the
amount
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
recommended by
the directors
approve the same or
such lesser amount
as may appear to
them to be
reasonable and
proper. It is thus
prerogative of the
board of directors to
recommend the
amount of dividend
to be distributed

10 2.3 No related provision. When preference

No Dividend shall be declared on shares are non-
equity shares for previous years cumulative, they are
in respect of which annual entitled to priority
financial statements have only in respect of
already been adopted at the the amount of
respective Annual General dividend due to
Meetings. them in current
year. Where they
Arrears of Dividend on are cumulative,
cumulative preference shares for they are entitled to
previous years may, however, be priority for the total
declared and paid accumulation in the
year in which
company proposes
to pay dividend.

It has been laid by

the Calcutta High
Court in
Raghunandan
Neotia v. New
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
Central Jute Mills,
that the declaration
of dividend is
business of annual
general meeting.
Dividend cannot be
declared
retrospectively with
reference to the
previous years, the
accounts of which
are closed at the
annual general
meeting held for
those years.

11 2.4 As per sub section 3 of section No Conflict The provision is

Interim Dividend shall be 123, The Board of Directors of same. Declaration of
declared at a meeting of the a company may declare Interim dividend is
Board. While Final Dividend is interim dividend during any the sole right of
recommended by the Board and financial year out of the Board of Director.
declared by the Members, surplus in the profit and loss
approval of Members is not account and out of profits of As per Part C of
required for declaration of the financial year in which Schedule II of
Interim Dividend. such interim dividend is SEBI(Listing
sought to be declared: Obligation and
Where a company has an Audit Disclosure
Committee, this Committee shall Requirements)
consider the financial results Regulations 2015
which shall thereafter be (LODR) , Audit
submitted to the Board for its Committee shall
consideration and declaration of consider reviewing,
Interim Dividend. with the
management, the
annual financial
statements and
auditor's report
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
thereon before
submission to the
board for approval.
12 2.5 Subsection 5 of section 123 of No Conflict Deemed Dividend is
Distribution of discount coupons the Act, prohibits payment of defined in Section
to all the Shareholders shall not dividend in any manner 2(22)(e) of the
be treated as deemed Dividend. otherwise than by cash. So, a Income Tax Act
company can pay dividend 1961.
only in cash, not in kind. The concept of
Deemed Dividend
As per second proviso of sub treats specified set
section 5, any dividend of payments made
payable in cash may be paid by closely held
by cheque or warrant or in companies by way
any electronic mode to the of loans or advances
shareholder entitled to the to certain
payment of the dividend. shareholders of the
company or to the
concerns/companie
s in which
shareholders have
substantial interest.
Any payment is
made by way of loan
or advance, the
recipient of the loan
or advance will be
liable to be taxed on
the received amount
as a dividend, to the
extent to which the
company has
accumulated profits,
under the deeming
provisions of section
2(22)(e)

S.No Relevant Para under SS 3
13 3.1
Dividend to be paid only to the
registered holders of shares
entitled to Dividend or to their
order or to their bankers.
Dividend shall be paid
(i) in respect of shares held in
electronic form, to those
Members whose names appear
as beneficial owners in the
statement of beneficial
ownership furnished by the
Depository(ies) as on the record
date fixed by the company for
this purpose;
(ii) in respect of shares held in
physical form, to those Members
whose names appear in the
company’s Register of Members
after giving effect to all valid
share transfers in physical form
lodged with the company before
the date of book closure or as on
the record date, as the case may
be.
The Dividend may also be paid
to the order of the Member or to
his banker.
“Synopsis on SS 3”
Article
Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
As distribution of
discount coupon is
out of preview of
Section 2(22)(e), it
will not be treated
as deemed dividend.
As per sub section 5 of section No Conflict .SS-3 brings out
123, No dividend shall be paid more clarity in
by a company in respect of methods of payment
any share therein except to of dividend
the registered shareholder of
such share or to his order or to
his banker and shall not be
payable except in cash.
Second proviso of 123(5)
states any dividend payable in
cash may be paid by cheque
or warrant or in any electronic
mode to the shareholder
entitled to the payment of the
dividend.
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS

13 3.2 As per the explanation to No Conflict Whereas the

Preference Shareholders shall be Section 43 of the Act, definition of
paid Dividend before Dividend is (ii) “preference share capital”, Dividend in the act
paid to the equity Shareholders with reference to any is inclusive one and
of the company. company limited by shares, the provisions
means that part of the issued nowhere clearly
In the case of Interim Dividend, share capital of the company distinguished
while Preference Shareholders which carries or would carry between final
need not necessarily be paid a preferential right with dividend and
Dividend before Interim respect to— interim dividend,
Dividend is paid to equity (a) payment of dividend, payment of interim
Shareholders, the Board should either as a fixed amount or an dividend to equity
take into account such sum as amount calculated at a fixed shareholder prior to
would be necessary to pay rate, which may either be free preference
Dividend to the Preference of or subject to income-tax; shareholders is not
Shareholders before and specifically
consideration of Interim (b) repayment, in the case of a restricted.
Dividend winding up or repayment of
capital, of the amount of the Here SS 3 should be
share capital paid-up or referred to take care
deemed to have been paid-up, of residual amount
whether or not, there is a necessary to pay
preferential right to the Dividend to the
payment of any fixed Preference
premium or premium on any Shareholders before
fixed scale, specified in the consideration of
memorandum or articles of Interim Dividend
the company;

14 4.1 As per Section 126 Right to No Conflict Wherein the Act

The amount of Dividend in dividend, rights shares and provides that the
respect of shares for which an bonus shares to be held in dividend is to be
instrument of transfer has been abeyance pending paid to the
delivered to the company but registration of transfer of registered
which have not been registered shares.— shareholder only,
for a valid reason shall be the SS 3 add clarity

S.No Relevant Para under SS 3
transferred to the Unpaid
Dividend Account.
Members may authorise the
company in writing to pay the
Dividend to the transferee
specified in the instrument of
transfer and the company shall
act upon such authorisation.
However, where such
instrument is not valid for any
reason, the company shall not
act upon such authorisation and
intimate the concerned Member
accordingly.
In case of shares which have not
been transferred because the
ownership thereof is in dispute,
or where specific prohibitory
orders have been passed by a
court or statutory authority,
Dividend should be kept in
abeyance and be transferred to
the Unpaid Dividend Account, as
and when it becomes due.
15 5.1
The requirement of deposit of
Dividend amount in a separate
bank account within five days
from the date of its declaration,
shall not apply to a Government
Company in which the entire
paid up share capital is held by
“Synopsis on SS 3”
Article
Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
Where any instrument of to it providing till
transfer of shares has been the ownership of
delivered to any company for shares are in
registration and the transfer abeyance or till it is
of such shares has not been not registered, the
registered by the company, it dividend accruing
shall, notwithstanding out of those shares
anything contained in any shall be transferred
other provision of this Act,— to Unpaid dividend
account.
(a) transfer the dividend in
relation to such shares to the Section 124 also
Unpaid Dividend Account specifies that the
referred to in section 124 dividend not paid or
unless the company is claimed will be
authorised by the registered transferred to
holder of such shares in Unpaid dividend
writing to pay such dividend account.
to the transferee specified in
such instrument of transfer;
and (b) keep in abeyance in
relation to such shares, any
offer of rights shares under
clause (a) of subsection (1) of
section 62 and any issue of
fully paid-up bonus shares in
pursuance of first proviso to
sub-section (5) of section 123
No such related provision. No Conflict SS 3 providing
exemption to a
Government
Company in which
the entire paid up
share capital is held
by the Central
Government or
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
the Central Government or State State
Government(s) or jointly by Government(s) or
both or by one or more jointly by both or by
Government Company. one or more
Government
Company.
16 5.3 As per Section 123(5) No No Conflict SS 3 has defined the
Dividend shall be paid in cash dividend shall be paid by a means for the
and not in kind. Dividend company in respect of any payment of
payable in cash may be paid share therein except to the dividend. It brings
through payable at par cheque registered shareholder of such out more clarity
or warrant or in any electronic share or to his order or to his where the Act is
mode of payment approved by banker and shall not be compendiary.
the Reserve Bank of India. To payable except in cash:
curb the practices of fraudulent Regulation 12 of
encashment of Dividend, the Provided further that any LODR states that the
company shall endeavour to pay dividend payable in cash may listed entity shall
Dividend directly to the bank be paid by cheque or warrant use any of the
accounts of the Members or in any electronic mode to electronic mode of
through any one of the the shareholder entitled to the payment facility
electronic modes specified by payment of the dividend. approved by the
the Reserve Bank of India viz. Reserve Bank of
electronic clearing services India, in the manner
(local, regional or national), specified in
direct credit, real time gross Schedule I, for the
settlement, national electronic payment of the
funds transfer etc. Where following:
Dividend is remitted through (a) dividends;
electronic mode, the company (b) interest;
shall send to the Member, a (c) redemption or
statement in writing showing repayment
the amount of Dividend paid. amounts:
Where payment of Dividend is
not possible through any Provided that where
electronic mode, such Dividend it is not possible to
shall be paid by way of cheque use electronic mode
payable at par or Dividend of payment,
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
warrant. ‗payable-at-par‘
warrants or cheques
The cheque or warrant shall be may be issued:
sent to the registered address of
the Member and, in the case of Provided further
joint holders, to the registered that where the
address of the Member named amount payable as
first in the Register of Members dividend exceeds
or to such person or to such one thousand and
address as the Member or the five hundred rupees,
joint holders have directed, in the ‗payable-at-par‘
writing. warrants or cheques
When payment is made by shall be sent by
Dividend warrant, the name of speed post.
the bank and account number, if
available, shall be mentioned in
the warrant after the name. In
case these are not available,
address of the Member shall be
printed after the name.

In case of payment of Dividend

through warrant or cheque
payable at par, if the amount of
Dividend exceeds one thousand
and five hundred rupees, the
company shall ensure to
dispatch such Dividend warrant
or cheque either by speed post
or registered post to the
concerned Member at his
registered address.

In case of a Nidhi company,

where the Dividend payable to a
Member is one hundred rupees
or less, it shall be sufficient
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
compliance if the declaration of
Dividend is announced in the
local language in one local
newspaper of wide circulation
and announcement of the said
declaration is also displayed on
the notice board of the Nidhis for
at least three months

17 5.4 Initial validity of the No such provision No conflict SS 3 describes the

Dividend cheque or warrant validity of Dividend
shall be for three months. Cheque and
Warrant which is
A cheque or warrant for pretty obvious to
payment of Dividend shall be follow.
valid for a period of three
months from the date of issue.
Where such cheque or warrant
remains unpaid after the initial
period of validity, a fresh
instrument shall be issued in lieu
thereof, within fifteen days of
the receipt of a valid request in
this regard and such instrument
shall also have a validity of three
months from the date of its
issue.
Particulars of every fresh cheque
or warrant issued by the
company shall be entered in a
Register of Dividend Warrants
kept for the purpose indicating
the name of the person to whom
the instrument is issued, the
number and amount of such
instrument and the date of issue.
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
18 5.5 No such provision No conflict The SS 3 in this
A duplicate Dividend cheque or matter is much
warrant shall be issued only similar to provisions
after obtaining requisite of Section 46 of the
indemnity/ declaration from the Act and rule 6 of the
concerned Member and after Companies (Share
ascertaining the encashment Capital &
status of the original Dividend Debenture) Rules
cheque or warrant. 2014.
In case of defaced, torn or
decrepit Dividend cheque or
warrant, a duplicate instrument
may be issued on surrender of
such defaced, torn or decrepit
instrument to the company.
In case of non-receipt of
Dividend warrant by the
Shareholder and if the same is
not returned undelivered to the
company, a duplicate warrant
may be issued by the company
after verifying the encashment
status.
Particulars of every duplicate
Dividend cheque or warrant
issued as aforesaid shall be
entered in a Register of
Duplicate Dividend Warrants
kept for the purpose, indicating
the name of the person to whom
the instrument is issued, the
number and amount of the
instrument in lieu of which the
duplicate instrument is issued
and the number & date of issue
of such duplicate instrument.

S.No Relevant Para under SS 3
19 5.6
The Dividend cheque or warrant
shall be accompanied by a
statement in writing showing
the amount of Dividend paid,
Folio no./DP ID and Client ID
nos., number of shares held by
the concerned Member as on the
record date, amount paid up on
each share and the financial year
to which the Dividend pertains.
20 5.7
Dividend shall be paid
proportionately on the paid-up
value of shares.
Unless the Articles provide
otherwise, Dividend shall be
paid in proportion to the amount
paid-up on the shares and for
the portion of the period of the
financial year in respect of which
it is paid. If any shares are issued
in between the financial year on
the terms that they shall rank for
Dividend from a particular date,
Dividend on such shares shall be
paid accordingly.
21 5.8
Calls in arrears and any other
sum due from a Member in
relation to the shares of the
company may be adjusted
against Dividend payable to the
Member.
“Synopsis on SS 3”
Article
Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
No related Provision No Conflict SS 3 prescribes the
matter to be written
on the Dividend
cheque or warrant.
Section 51: Payment of No Conflict There is no
dividend in proportion to difference
amount paid-up.—
A company may, if so
authorised by its articles, pay
dividends in proportion to the
amount paid-up on each
share.
As per Table F Clause 84. The No Conflict Dividend can be
Board may deduct from any utilized for
dividend payable to any adjustment of calls
member all sums of money, if in arrears and any
any, presently payable by him other sum due from
to the company on account of a member.
calls or otherwise in relation
to the shares of the company.

S.No Relevant Para under SS 3
In the case of listed companies,
calls in arrears or any other sum
due from a Member in relation
to the shares of the company,
may be adjusted against the
Dividend payable to him after
giving such notice, as may be
required.
In the case of other companies, if
the Articles so provide , any
other sums due from a Member,
in a capacity other than as a
Member, may also be adjusted
against the Dividend payable to
him.
22 6.2
With respect to transfer of
unpaid or unclaimed Dividend to
the Fund, the company shall
ensure compliance with the
following requirements:
(a) It shall send a statement to
the Investor Education and
Protection Fund (IEPF)
Authority in the prescribed form
containing the details of transfer
of unpaid or unclaimed Dividend
to the Fund and obtain a receipt
from the IEPF Authority in
evidence of such transfer. Such
statement shall be furnished
within thirty days of transfer of
unpaid or unclaimed Dividend to
IEPF.
“Synopsis on SS 3”
Article
Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
As per Rule 5 of IEPF Rules No Conflict The Rules and SS 3
2016 are similar.
(3) Every company shall file
with the concerned Authority
one copy of the challan
referred to in sub-rule (2)
indicating the deposit of the
amount to the Fund and shall
fill in the full particulars of the
amount tendered, including
the head of account to which
it has been credited.
(4) The company shall, along
with the copy of the challan as
required under sub-rule (3),
furnish a Statement in Form
No. IEPF 1 containing details
of such transfer to the
Authority within thirty days
of submission of challan.
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
(b) It shall maintain record
consisting of name, last known (5) The amount may also be
address, amount, Folio no., DP ID remitted by Electronic Fund
/ Client ID no., certificate Transfer in such manner, as
number, beneficiary details etc. may be specified by the
of the persons in respect of Central Government.
whom unclaimed or unpaid
Dividend is transferred to the (6) (a) On receipt of the
Fund. statement, the Authority shall
enter the details of such
(c) It shall not transfer any receipt in a Register
Dividend to the Fund where maintained physically or
there is a specific order of Court electronically by it in respect
or Tribunal or any other of each company every year,
statutory authority restraining and reconcile the amount so
such transfer. It shall furnish remitted and collected, with
details of such unpaid Dividend the concerned designated
to the IEPF Authority in the bank on monthly basis.
prescribed form within thirty
days from the end of the (b) Each designated bank
financial year. shall furnish an abstract of
such receipts during the
(d) It shall file with the IEPF month to the Authority within
Authority within thirty days of seven days after the close of
the end of each financial year, a every month.
statement in the prescribed
format containing the details of (c) The company shall
the unclaimed or unpaid maintain record consisting of
Dividend due to be transferred name, last known address,
to the Fund in the next financial amount, folio number or
year. client ID, certificate number,
beneficiary details etc. of the
(e) Within thirty days of closure persons in respect of whom
of financial statements for a unpaid or unclaimed amount
financial year, the company shall has remained unpaid or
furnish another statement to the unclaimed for a period of
IEPF Authority stating therein seven years and has been
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
reasons for deviation, if any, transferred to the Fund and
between the unclaimed or the Authority shall have the
unpaid Dividend detailed in the powers to inspect such
earlier statement under (d) records
above and the actual Dividend
transferred to the Fund.
Any claimant of unpaid or
unclaimed Dividend transferred
to the fund, shall be entitled to
apply for refund from the
Investor Education and
Protection Fund, after following
the prescribed procedure

23 6.3 As per Rule 5 (8) of e No Conflict The requirement of

Before transferring any Investor Education and sending individual
unclaimed or unpaid Dividend to Protection Fund Authority notices to the
the Investor Education and (Accounting, Audit, Transfer Members before
Protection Fund, the company and Refund) Rules, 2016 transferring any
shall give an individual Every company shall within a unpaid or unclaimed
intimation to the Members in period of ninety days after the dividend atleast 3
respect of whom such unclaimed holding of Annual General months’ before the
Dividend is being transferred, at Meeting due date for such
least three months before the or the date on which it should transfer.
due date of such transfer. have been held as per the
The company shall intimate the provisions of section 96 of the Where on one side
concerned Members individually Act and every year thereafter the provisions of
of the amount of Dividend till completion of the seven IEPF (Accounting,
remaining unclaimed or unpaid years period, identify the Audit, Transfer and
which is liable to be transferred unclaimed amounts, as Refund) Rules, 2016
to the Fund and advise the referred in sub-section 2 of mandates for giving
Members to claim such amount section 125 of the Act, as on notice to those
of Dividend from the company the date of holding of Annual Members whose
before such transfer. General underlying shares
Meeting or the date on which are liable for
it should have been held as transfer on which
per the provisions of section dividend has
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
96 of the Act, separately remained unpaid or
furnish and upload on its own unclaimed for 7
website and also on website of consecutive years,
Authority or any other the provisions of the
website as may be specified by Standard provides
the Government, a statement for giving notice to
or information through Form the Members before
No. IEPF 2, separately for each transferring any
year, containing following unclaimed or unpaid
information, namely:- dividend to the
(a) the names and last known IEPF.
addresses of the persons
entitled to receive the sum; Thus, the provision
(b)the nature of amount; of the Standard
(c) the amount to which each seems to be
person is entitled; cumbersome for
(d)the due date for transfer companies to follow
into the Investor Education requiring them to
and Protection Fund; and give notice every
(e) such other information as year before
may be considered relevant transferring any
for the purposes. unpaid or unclaimed
dividend to the
IEPF.
24 6.5 Proviso to Section 124(6) No Conflict SS 3 is similar to IEP
Before transfer of such shares to provides that any claimant of Rules 2016 in the
the Fund, the company shall shares transferred above shall matter of
send individual notice to the be entitled to claim the transferring fund to
concerned Members at least transfer of shares from IEPF account.
three months in advance at his Investor Education and
latest available address Protection Fund in
registered with the company accordance with such
giving details of the Members procedure and on submission
and the shares due for transfer of such documents as may be
to the Fund. prescribed.
Such details shall also be
uploaded on the website of the Also to refer Rule 6 of
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
company, if any. Investor Education and
Protection Fund Authority
A notice shall also be (Accounting, Audit, Transfer
simultaneously published in and Refund) Rules, 2016
leading newspapers in English
and regional language having
wide circulation in the place
where the registered office of the
company is situated, informing
the concerned Members that the
names of such Shareholders
whose shares are due for transfer
and their folio number or DP ID -
Client ID are available on
company website duly
mentioning the website address.

Any claimant of shares

transferred to the Fund, shall be
entitled to claim such shares in
accordance with such procedure
and on submission of such
documents as prescribed.

The company shall not transfer

any shares or Dividend amount
to the Fund, where there is a
specific order of Court or
Tribunal or any other statutory
authority restraining any
transfer of shares and payment
of Dividend or where such
shares are pledged or
hypothecated under the
provisions of the Depositories
Act, 1996.
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
25 8. No related provisions - SS 3 prescribes for
Preservation of Dividend preservation of
Cheques, Warrants and Dividend dividend cheques,
Registers warrents and
dividend registers
8.1 Dividend cheques or which should be
warrants returned by the Bank, adopted by the
after payment thereof, and the companies
Dividend Registers shall be
preserved by the company for a
period of eight years.

Where the company has given an

undertaking to the Bank for
preservation or safe keeping of
paid Dividend cheques or
warrants for a specified period,
the said instruments shall be
preserved for such specified
period or eight years from the
date of the instrument,
whichever is longer.

The Dividend cheques or

warrants so preserved shall be
destroyed only with the
approval of the Board or in
accordance with the policy
approved by the Board for this
purpose.
26 9.1 Section 134(3)(k) provides - Schedule IV Part A
Notes to Accounts forming part for disclosure of the amount if of LODR (J)
of the financial statements of the any, which it recommends specifies
Company shall disclose the should be paid by way of The listed entity
aggregate amount of Dividend dividend. shall disclose the
proposed to be distributed to following in respect
equity and Preference of dividends paid or
 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
Shareholders for the financial recommended for
year and the related amount of the year, including
Dividend per share. Arrears of interim dividends :
fixed cumulative Dividend on (i) amount of
preference shares shall also be dividend distributed
disclosed separately. or proposed for
distribution per
9.2 The Balance Sheet of the share; the amounts
company shall also disclose in respect of
under the head ‘Current different classes of
Liabilities and Provisions’, the shares shall be
amount lying in the Unpaid distinguished and
Dividend Account together with the nominal values
interest accrued thereon, if any. of shares shall also
be indicated;
9.3 The amount of Interim
Dividend, if any, paid during the (ii) where dividend
financial year and final Dividend is paid or proposed
recommended by the Board of to be paid pro-rata
directors shall be disclosed in for shares allotted
the Board’s Report. during the year, the
date of allotment
9.4 The Annual Report of the and number of
company shall disclose the total shares allotted, pro-
amount lying in the Unpaid rata amount of
Dividend Account of the dividend per share
company in respect of the last and the aggregate
seven years and when such amount of dividend
unpaid Dividend is due for paid or proposed to
transfer to the Fund. The be paid on pro-rata
amount of Dividend, if any, basis.
transferred by the company to
the Investor Education and
Protection Fund during the year
shall also be disclosed.

27 All the listed companies shall - - The requirements

 “Synopsis on SS 3”
Article

S.No Relevant Para under SS 3 Provision under Companies Whether any Remarks
Act 2013 conflict
between the
Act,
Regulations
and SS
ensure compliance with the set out under
requirement covered under Annexure A are
Annexure A same as in LODR.

No additional
requirement.

Also read our article Secretarial Standards 3 – a voluntary guideline for companies!

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