Indian dividend declaration arrangements (s. 2(42))

What the rule says. Section 2(42) refers to arrangements a company makes for declaring and paying dividends within India. Rule 3 spells those arrangements out. They apply to dividends on all shares, including preference shares.

The three arrangements

1. Share register. The register for all shareholders is regularly maintained at the company's principal place of business in India, in respect of any tax year from a date not later than 1 April of that year.
2. General meeting. The general meeting that passes the accounts for the tax year and declares any dividend for it is held only at a place within India.
3. Payment. Any dividend declared is payable only within India, to all shareholders.

Reading it in practice. The three limbs are listed together and operate as a set: the register, the meeting and the place of payment must each be in India. A company that holds its accounts-approval meeting abroad, or pays dividends outside India, does not meet the arrangements described in this rule.

Related provisions. Section 2(42).