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Distribution of profits in a Company

Profit or a portion of profit that can be legally distributed as a dividend to the shareholders is known as Divisible Profit. Considering the small shareholders and their concerns with regard to failure to transfer the dividend to the shareholders the Companies Act, 2013 provides for elaborate mechanism where the shareholders can claim the shares through an authority constituted for the purpose i.e. Investor Education and Protection Fund (IEPF). The Act clearly enunciates the procedure for transfer of unpaid dividend to separate account and thereafter after particular time period to the authority. The company has to mandatorily comply with the legal requirement, failure may attract penal provisions, as well as this may also be reflected in the Board’s report. A company secretary is also an investor relation officer of the company, he acts as a bridge between the shareholder and company management.

Author

Gayatri Dhote

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