Q.A company that fails to pay dividend within 30 days of declaration faces serious consequences under the Companies Act, 2013.

This statement is TRUE — Section 127 attaches real criminal and financial consequences to a missed 30-day payment deadline.

The statement is TRUE.

Section 127 — the consequence. Where a dividend has been declared but is not paid, or the dividend warrant is not posted, to a shareholder entitled to it within 30 days from the date of declaration, every director who is knowingly a party to the default is punishable with imprisonment for a term which may extend to two years, and is also liable to a fine of not less than ₹1,000 for every day the default continues. In addition, the company itself must pay simple interest at 18% per annum for the period the default continues — so the consequence is not limited to the individual directors; the company bears a direct financial cost too.

Why the law is this strict: once a dividend is validly declared, it becomes a debt owed to the shareholder, exactly like any other unpaid debt. Allowing a company to sit on declared-but-unpaid dividend indefinitely, with no real consequence, would undermine shareholders' basic trust in the declaration process itself. …