Correspondence Regarding Payment of Dividend

7. Correspondence Regarding Payment of Dividend

Meaning: a dividend is the portion of a company's distributable profits that the company decides to pay out to its members in proportion to their shareholding. Once the Board recommends a dividend and the members declare it (or, for an interim dividend, the Board itself declares it) at the Annual General Meeting under Section 123 of the Companies Act, 2013, the Secretary must ensure it actually reaches every member entitled to it, and does so through a defined correspondence process.

The statutory time-limit [Section 123 read with Section 127]: dividend must be paid to every entitled member within 30 days of the date of declaration, either by cheque, dividend warrant, or direct electronic credit (NEFT/ECS) to the member's registered bank account. Failing to do so, without a lawful excuse, makes the company and every officer in default liable to penalty and interest under Section 127.

Dividend letter/warrant: the Secretary typically sends a covering letter, or a combined dividend warrant-cum-advice, stating the rate/amount of dividend declared per share, the total amount payable to that member based on their holding as on the record date, and the mode of payment. Where paid electronically, the letter is simply an advice confirming the amount credited.

Specimen dividend advice letter:

SAHYADRI TEXTILES LIMITED
Regd. Office: 88, Shivaji Nagar, Kolhapur - 416 003
CIN: L17110MH2010PLC201456

Ref. No. STL/CS/2025-26/455                                    Date: 20th August, 2026

To,
Mr. Suresh N. Patil
Folio No. STL-06214
204, Ashirwad Apartments, Rajarampuri,
Kolhapur - 416 008

Dear Sir,

Sub: Payment of Final Dividend for the Financial Year 2025-26

We are pleased to inform you that the members of the Company, at the Annual General Meeting held on 12th August, 2026, declared a Final Dividend of Rs. 2.50 per Equity Share of Rs. 10 each, for the financial year ended 31st March, 2026, in terms of Section 123 of the Companies Act, 2013. …